delta electronics, inc. 2012 annual report · delta electronics, inc. 2012 annual report...

Smarter. Greener. Together.

DELTA ELECTRONICS, INC. 2012 ANNUAL REPORT

Tricker:2308

Table of Contents

A Letter to Our Shareholders

Corporate Governance

Consolidated Financial Highlights

Financial Report

Balance Sheets

Statements of Income

Statements of Changes in Stockholders Equity

Statements of Cash Flows

Notes to Financial Statements

01

07

09

10

13

15

16

19

21

01

A Letter to Our ShareholdersDear Shareholders:

2012 global economy was marked by uncertainty and a continued lack of market confidence. Delta nevertheless delivered strong performance thanks to the efforts of our employees. In addition to revenues growth, Delta saw a sharp jump in profitability. Delta's consolidated revenues in 2012 amounted to 171.8 Billion NTD, 6% increase on the previous year. Operating profit was $42.2 Billion NTD, up 22% from last year with a gross margin of 24.5%. Net operating profit was 17.4 Billion NTD, up 32% from last year and accounted for 10.1% of total revenues. Net profit after tax increased by 47% to 16.1 Billion NTD compared to last year and the net operating profit margin was 9.4%. Earning per share (EPS) in 2012 was 6.68 NTD.

"Care for the Environment, Energy-saving and Our Green Earth" has been the overriding business philosophy of Delta for decades and a core corporate element of our culture. Delta has not only cemented our leadership and developed new opportunities in the power supply and component ODM industry, but has also actively expanded into systems and solutions. By drawing on our thorough understanding of customer requirements, innovative technologies and products, and seamless integration of software and hardware, we create more environmentally friendly, comfortable and intelligent applications that enhance Delta's brand value. Important changes were made to Delta's corporate governance structure and management team last year to strengthen the company's foundations for future development. The following is a brief summary of key developments in our business and organization over the last year as well as our vision for the future.

In the power supply and components field, Delta has been the world leader by market share of power supplies and DC brushless fan motors for many years. We have also continued to introduce our core technologies and innovative R&D results into more applications, while improving their energy conversion efficiency and recycling. Delta has not only continued to maintain our leadership in the communications, industrial, automotive and consumer electronics industries, but has also made major gains in the emerging cloud application, medical and electric vehicle markets last year. Delta successfully developed the world's first titanium-grade server power supply with 96% efficiency. Delta also earned orders from large data center customers such as Google, Facebook and Amazon, and Delta now owns more than 50% of the global server power supply market. Our entry into the medical imaging device market progressed smoothly as well. New products, such as power supplies for medical X-ray machines, are now shipping and creating higher added value. In 2011, Delta began working on onboard chargers for electric vehicles. Last year, Delta released a new product with a conversion efficiency of up to 95% that is also lighter, thinner, more compact and more powerful

than competing products. We are now officially a tier-1 supplier to the top 3 car brands in the U.S., and we anticipate strong business growth in this area.

Delta’s Fan & Thermal Management Business Group leads the industry in slim design and mass production technology. We are also actively leveraging low-power consumption and low-noise designs to extend our product lines into smart air ventilation fans, hot-air blowers and thermal exchangers. These products will allow the general public to enjoy the high quality of life provided by green technology while saving energy and reducing carbon emissions. Delta is currently the only company to have Taiwan's Energy Label certification for its complete range of smart air ventilation fans. Cyntec, a Delta wholly-owned subsidiary, specializes in the development of highly integrated miniaturized components and modules. The company has won customer recognition for its responsiveness, technology, and mass production capability. The popularity of handheld electronic devices, the rapid development of the cloud service industry, the general public's increasing demand for quality of life as well as healthcare services all indicate that Delta's power supply and components business should continue to perform well.

Delta is engaged in a variety of energy management fields, including products, systems and turnkey solutions for industrial automation, energy systems, electric vehicle control, power and charging systems, large wind turbine converters and photovoltaic inverters. All of these products delivered a remarkable performance last year. Delta Industrial Automation developed a number of innovative products and turnkey solutions last year including robots and energy-efficient industrial automation solutions which integrate lighting, injection molding machines, elevators, air-conditioning, air compressors and factory power management systems. In addition, Delta also developed the first digital control system solution (DCS) for CNCs. The new in-house developed DCS is a complete, responsive and flexible solution that integrates control panel, servo drive, spindle motor and servo motor, supports multi-tasking and delivers speed, precision and stability. Delta also developed a new range of highly competitive medium-sized programmable controller products. All of these demonstrate innovative R&D by Delta Industrial Automation to provide customers with energy-saving, high-performance products and solutions that take industries into the new age of smart, green energy.

Delta's telecom power supplies have always been the industry leader with an energy conversion efficiency of up to 97%. Last year, we integrated our world-leading core technologies in energy management and thermal engineering with environmental management and rack design solutions to offer a total solution for next-generation data center infrastructure. The new integrated solution for data center infrastructure features UPS, power distribution,

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environmental monitoring and precision air-conditioning with the advantages of modularity, flexible integration, ease of management and high reliability. Enterprise customers can build their own "Green Data Center" for significant savings in energy and operating costs. Apart from large data centers, Delta is actively investing in the market for private enterprise clouds by developing racks that integrate power supply, cooling and UPS products. These products allow customers to combine Delta racks and servers to greatly speed up the rollout process and have won unanimous compliment from our customers.

Delta made breakthroughs in electric vehicle charging solutions last year. A grant was received from the U.S. Department of Energy to work with North American electricity companies and automotive manufacturers on joint development of home electric vehicle charging equipment under a smart grid architecture. The grant is intended to reduce the cost of communication between charging equipment and electrical grids. Delta also participates in Norway's charging grid initiative by building a full-scale electric vehicle charging facilities along the 3,000 km long E6 highway between Norway and Sweden. Delta's R&D integration ability, product innovation and design abilities have repeatedly won international recognition. The team's efforts will undoubtedly become evident as the electric vehicle industry prospers in Taiwan and overseas.

In solar energy market, reductions in government subsidies and global oversupply had severe adverse impact on the industry. Nevertheless, the drop in market prices is positive for the industry as a whole over the long-term and will encourage the popularization of PV technology. Delta therefore made the decision to merge DelSolar, a Delta subsidiary, into Neo Solar Power, through share swap scheme. The new, larger company will be more competitive and will become the largest PV cell maker in Taiwan and the second largest in the world. Delta hopes that this will accelerate the replacement of dirty fossil fuels with clean and cost-effective renewable energy.

In smart green life, the most significant progress has been in the network communications and display solutions business. Delta's network communications subsidiary, Delta Networks, has grown steadily over the years by balancing the demands of high-end enterprise and SOHO markets. The rapid growth of cloud and smart applications brings with it increasing demand for network communications and makes Delta Networks one of Delta's key engines for growth. Delta's display solutions business has not only maintained its leadership in the high-end projection systems market, but has also integrated art and aesthetics into everyday life through integrated software technologies. In 2012, Delta set up 12 large cinema-grade projectors outside of the Red House in Taipei. The exterior of the unique octagonal building formed a large

outdoor 3D projection stage, and audio control technology was used to combine the visual effects with the architecture. The audience was able to relive the medal-winning performances of Chinese Taipei Olympic athletes and enjoy the opening ceremony at the London Olympic Stadium. This authentic experience of the world's greatest athletics event provided an excellent demonstration of smart green life.

LED is the trend for future lighting and it is one of Delta's new business units. Delta spent six months last year on the Peng Bay Bridge scenic lighting project, installing 2,600 LED lights of various types. The lighting system was officially activated in October, 2012. The design of the lighting had to balance the needs of eco-conservation, lighting technology, tourism and recreation. The eco-friendly energy lighting and variable 7-colored LED lighting now transforms the Peng Bay Bridge into a glowing rainbow at night. The bridge is now a part of life for residents and tourists alike, emphasizing the endless possibilities of advanced technology in smart green living. While high costs continue to hamper LED adoption, Delta believes that LED, with its advantages in energy-saving, long life, mercury-free and a high color rendering property, will soon replace conventional lighting in the future and make a contribution to the environment.

A keen understanding of market trends and readiness to exploit new business opportunities have always been one of the keys to Delta's success. Delta has continued to actively adjust our overall strategy and take advantage of emerging opportunities in response to changes in the industrial structure and economic climate. The Delta’s business model continues to evolve as well. From Delta Inside to Delta Outside, from IT to ET (Energy Technology), from ODM to brand-oriented integrated energy-saving services, these all trace how Delta has grown in response to changes in the external environment. While as Delta's business units concentrate their energies on developing innovative products and providing customers with even better value-added solutions, we are sparing no effort when it comes to integrating and applying products and technologies across different business units. Take the most advanced intelligent monitoring and management system iPEMSTM for example, it integrates our expertise in video conferencing, sensing, network communications and power management was combined together to support the concurrent monitoring of more than 10 million data points for real-time data collecting, smart data analysis and ultra high-definition data visualization. The iPEMSTM can be used in a variety of different industrial monitoring and management applications such as energy production and consumption, smart factories, large data centers, smart grids, traffic and communications. This advanced high-performance, high-reliability, flexible and eco-friendly energy-saving solution helps managers make right decisions quickly. Green building is another example. We integrated renewable energy applications, energy management optimization,

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factory energy-saving automation and home energy-saving products into a solution, and optimized architectural design, choice of building materials, natural lighting and insulation, air-conditioning and hot water systems. The result not only greatly reduces the consumption of water and power, but also offers more comfortable indoor temperatures, humidity and air quality. These system solutions have translated into improved productivity and environmental quality. Delta has built a number of green factories, offices and laboratories over the years that have proven to be great successes. Building upon our solid foundations and exploiting the synergies from collaborative development to provide even more influential total integrated solutions is now Delta's main direction of development for the future.

The success of our integrated solutions business depends on in depth understanding of the customer's problems and the technology to solve them. Delta has made long-term investments in cultivating R&D expertise and innovation. We also approach the market carefully to understand customer requirements and establish our brand value. Having previously been named one of the first "Top 20 Innovation Enterprises in Taiwan" by the Industrial Development Bureau of the Ministry of Economic Affairs in 2011, Delta earned the Outstanding Innovative Enterprise Award again last year. The top award in the National Industrial Innovation Awards recognized Delta's embrace of energy-saving, sustainability and value creation as core values as well as our innovations in system integration, design, channel, brand and service. Last year, Delta was once again named as one of the top 20 international brands in Taiwan by Interbrand, making it the only large electronics company in Taiwan to receive this accolade with an industrial brand for two successive years. 2010 was Year One for the Delta brand. After an analysis of global trends and the Delta core values, "Smarter. Greener. Together." was defined as the Delta brand essence last year. Smarter represents our continued advancement in technology in response to customers' expectations of the Delta brand on a functional level. Greener embodies our commitment to the business philosophy of "Care for the Environment, Energy-saving and Our Green Earth ". Together describes the Delta management philosophy of working together with customers to establish a long-term partnership and grow together. We hope these three English words will effectively communicate the Delta value, establish good will in business, and ultimately ensure our continued competitiveness and guide our sustainable development.

Delta received many accolades from customers such as ASUS, SONY, Dell and Lenovo in 2012. After receiving the "Best CEO in Technology/Hardware", "Best Investor Relations" and "Best IR Professional" awards from Institutional Investor magazine in 2011, Delta's management team was presented with the "Best investor relations officer" and "Best investor relations by a CEO or president" awards by IR Magazine in 2012. Delta's investor relations

ranking in Greater China also jumped into 3rd place, showing that Delta's long-term efforts in corporate governance and investor relations is paying off. Delta's commitment to corporate social responsibility has been well recognized too: Delta won the CommonWealth Magazine's "Most Admired Company" award for the 11th consecutive year and the Corporate Citizenship Award for the 6th consecutive year, the Global Views Magazine's top prize in the education category for the "2012 Corporate Social Responsibility Awards", the Securities & Futures Institute's best possible A++ rating for disclosure and transparency by a publicly listed company, was included again in the "World Index" and "Asia-Pacific Index" of the Dow Jones Sustainability Indexes, and was named global "Industry leader" in the ITC Electronic Equipment sector. Delta also became the first Taiwanese-owned electronics company to receive the "Outstanding Enterprise Award" in China’s Corporate Social Responsibility Ranking last year and has now been named one of the Top 50 private enterprises in China for three consecutive years. The awards provide ample proof of how highly regarded Delta is in the China market.

Delta constantly strives toward the best practices of corporate governance, although we might already be considered a role-model in Taiwan. The Delta Board of Directors was restructured last year, and the supervisors were replaced by an Audit Committee and Remuneration Committee made up of three independent directors. The move marked an important step towards best corporate governance. Changes were made to the Delta management team last year as well. Mr. Bruce Cheng, our beloved founder, announced his retirement last year and resigned his chairmanship to become honorary chairman. The responsibility of managing the company is now shared by me as new Chairman, Vice Chairman Mark Ko, CEO Ping Cheng and COO Johnson Lee. We present Mr. Bruce Cheng with our highest regards for devoting more than forty years of his life to laying the foundations for Delta's success. We are also grateful to our colleagues for their long-term contributions to the company, and also to our customers, suppliers, shareholders and the general public for their support and belief in Delta. We will strive to continue to lead all Delta employees in the direction set for the company and implement the growth strategies we have developed. We will do our best to realize our goals, accomplishing our corporate mission, pass on the Delta value, and forge Delta into an internationally respected enterprise.

Yancey Hai, Chairman

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Corporate GovernanceDelta believes that high quality corporate governance is the best way to ensure that the company always delivers excellent performance and provides an optimum balance for all stakeholders' interests. Corporate governance is therefore our top priority.

At Delta, the board currently consists of thirteen directors, including three independent directors. The role of CEO and chairman has been split since 2004. To enhance the board's responsibility and trust, it convenes at least once quarterly to review the company's performance and discuss important strategic issues. In 2012, the board convened on three occasions before election and four after it. The overall attendance rate was 97.5%.

Key resolutions passed by the board are published in a timely manner on the Market Observation Post System of the Taiwan Stock Exchange and in the corporate governance section of the Delta website. Other relevant documents are also provided online for reference.

The board has organized a Compensation Committee consisting of three independent directors, to evaluate the performance-linked compensation of the company’s directors and executive officers. An Audit Committee was set up in 2012 to review the financial reports, performance of accountants, implementation of internal control systems, compliance with regulations and risk management. The committee is composed of three independent directors. Apart from the board meetings and committee meetings, the independent directors also take part in Delta’s internal strategy meetings to ensure they are familiar with the company's current activities and can provide appropriate advice when necessary.

The core activities of the company are R&D, manufacturing and sales. We do not participate in high-risk and highly leveraged investments. Delta consistently monitors capital on the market and interest rates, and makes cautious funding decisions. Simultaneously, through our auditing, finance, legal and intellectual property departments, and others, we are able to assess and manage risks associated with all operations to maintain company sustainability.

Delta’s efforts in corporate governance continued to win outside recognition in 2012. In 2012, for the second consecutive year, Delta was selected for two of the prestigious Dow Jones Sustainability Indexes—the DJSI World Index and the DJSI Asia / Pacific Index. Delta was also ranked first among the 29 leading companies in the Electronic Equipment sector and named as “Sector Leader.” We were awarded “Most Admired Company” in the electronics industry and received a rating of A++ for transparency and disclosure from the Securities and Futures

Institute in Taiwan. We received “Best Investor Relations Award” from FinanceAsia Magazine and “Best IR Professional” from Institutional Investor Magazine. In addition, we were listed on IR Magazine's short list in eight categories and ranked third for best IR practices in 2012 for our outstanding IR performance, while Chairman Mr. Yancey Hai was honored with the “Best CEO Award.” We shall continue to take actions such as strengthening the organizational functions of the board, to better ensure sound corporate governance at Delta.

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Consolidated Financial Highlights

2008 2009 2010 2011

NT$ million

20,000

40,000

60,000

80,000

100,000

120,000

180,000

160,000

140,000

Revenues

SalesGross profitGross marginOperating profitOperating MarginNet Income After TaxNet MarginEPS (NT$)Total AssetsTotal Shareholders' EquityROE (%)

2012171,76042,16024.5%17,35210.1%16,1109.4%6.68

181,88999,40420.0%

(in NT$ million, except otherwise indicated)

2011162,47434,61621.3%13,1628.1%

10,9916.8%4.58

193,19492,48614.3%

2008 2009 2010 2012

NT$ million

20,000

40,000

60,000

80,000

100,000

120,000

180,000

160,000

140,000

Net Profits

-

Return on Stockholders' Equity

19.2%

3.0%

0%

8.0%

13.0%

18.0%

23.0%

28.0%

33.0%

2008 2009 2010 2012

17.4%

Earnings Per Share

5.20

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

2008 2009 2010 2011

NT$

4.60

2012

4.58

124,120

142,645

11,657

10,251

171,302

2012

162,474

10,991

2011

15,754

14.3%

2011

22.7% 6.69

171,76016,110

20.0%

6.68

Financial Report

DELTA ELECTRONICS, INC. ANDSUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

REPORT OF INDEPENDENT ACCOUNTANTS

DECEMBER 31, 2012 AND 2011

------------------------------------------------------------------------------------------------------------------------------------For the convenience of readers and for information purpose only, the auditors’ report and the accompanyingfinancial statements have been translated into English from the original Chinese version prepared and used inthe Republic of China. In the event of any discrepancy between the English version and the originalChinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’report and financial statements shall prevail.

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REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

PWCR12003974

To Delta Electronics, Inc.

We have audited the accompanying consolidated balance sheets of Delta Electronics, Inc. andsubsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of income, ofchanges in stockholders' equity and of cash flows for the years then ended. These financialstatements are the responsibility of the Company's management. Our responsibility is to express anopinion on these financial statements based on our audits. As explained in Note 2. 1)(2), we did notaudit the 2011 financial statements of certain consolidated subsidiaries, which statements reflect totalassets of $1,051,049,000, constituting 0.54% of the consolidated total assets as of December 31, 2011,and total operating revenues of $3,291,816,000, constituting 2.03% of the consolidated operatingrevenues for the year then ended. In addition, we did not audit the financial statements of certainlong-term equity investments, accounted for under the equity method. Long-term equity investmentsin these companies amounted to $5,662,006,000 and $5,527,955,000, constituting 3.11% and 2.86% ofthe consolidated total assets as of December 31, 2012 and 2011, respectively, and total investmentincome was $871,618,000 and $499,987,000, constituting 3.63% and 2.87% of the consolidatedincome before income tax and minority interest for the years then ended, respectively. Thosestatements were audited by other auditors whose reports thereon have been furnished to us, and ouropinion expressed herein, insofar as it relates to the amounts and the information disclosed in Note 11.2) included for such subsidiaries and investee companies, is based solely on the reports of the otherauditors.

We conducted our audits in accordance with the “Rules Governing Examination of FinancialStatements by Certified Public Accountants” and generally accepted auditing standards in the Republicof China. Those standards and rules require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.An audit also includes assessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation. We believe that ouraudits and the reports of the other auditors provide a reasonable basis for our opinion.

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In our opinion, based on our audits and the reports of the other auditors, the consolidated financialstatements referred to above present fairly, in all material respects, the financial position of DeltaElectronics, Inc. and subsidiaries as of December 31, 2012 and 2011, and the results of their operationsand their cash flows for the years then ended in conformity with the “Rules Governing the Preparationof Financial Statements by Securities Issuers” and generally accepted accounting principles in theRepublic of China.

Delta Electronics, Inc. adopts International Financial Reporting Standards, International AccountingStandards, and relevant interpretations and interpretative bulletins (IFRSs) that are ratified by theFormer Financial Supervisory Commission, Executive Yuan, R.O.C. (FSC) in the preparation of itsfinancial statements effective January 1, 2013. Information relating to the adoption of IFRSs isdisclosed in Note 13 under the requirements of Jin-Guan-Zheng-Shen-Zi Order No. 0990004943 ofFSC, dated February 2, 2010. The IFRSs may be subject to changes during the time of transition;therefore, the actual impact of IFRSs adoption on Delta Electronics, Inc. may also change.

The consolidated financial statements of Delta Electronics, Inc. and subsidiaries as of and for the yearended December 31, 2012, expressed in US dollars, are presented solely for the convenience of thereader and were translated from the financial statements expressed in New Taiwan dollars using theexchange rate of NT$29.040 to US$1.00 at December 31, 2012. This basis of translation is not inaccordance with generally accepted accounting principles in the Republic of China.

PricewaterhouseCoopers, TaiwanMarch 11, 2013-------------------------------------------------------------------------------------------------------------------------------------------------The accompanying consolidated financial statements are not intended to present the financial position and results ofoperations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions otherthan the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of suchfinancial statements may differ from those generally accepted in countries and jurisdictions other than the Republic ofChina. Accordingly, the accompanying consolidated financial statements and report of independent accountants are notintended for use by those who are not informed about the accounting principles or auditing standards generally accepted inthe Republic of China, and their applications in practice.As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liabilityfor the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from thetranslation.

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DELTA ELECTRONICS, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS

DECEMBER 31,(EXPRESSED IN THOUSANDS OF DOLLARS)

US Dollars New Taiwan DollarsASSETS Notes 2012 (Unaudited) 2012 2011

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Current AssetsCash and cash equivalents 4(1) $ 1,759,509 $ 51,096,128 $ 67,695,906Financial assets at fair value through profit or loss - current 4(2) 25,251 733,285 2,342Available-for-sale financial assets - current 4(5) 20,674 600,373 524,013Derivative financial assets for hedging - current 10(9) 1,374 39,901 115,111Financial assets carried at cost - current 4(6) - - 86,180Notes receivable, net 45,440 1,319,593 1,330,220Accounts receivable, net 4(3) 1,204,493 34,978,476 34,708,687Accounts receivable, net - related parties 5 42,420 1,231,877 816,456Other receivables, net 22,797 662,035 2,082,657Other financial assets - current 6 1,459 42,384 143,061Inventories, net 4(4) 532,405 15,461,032 19,126,113Prepayments 95,815 2,782,463 2,384,204Non-current assets classified as held for sale 4(13) 415,838 12,075,952 -Deferred income tax assets - current 4(23) 20,303 589,592 597,914Other current assets 9,527 276,657 394,718

Total current assets 4,197,305 121,889,748 130,007,582Funds and Investments

Financial assets at fair value through profit or loss - non-current 4(2) 8,523 247,513 1,820,525Available-for-sale financial assets - non-current 4(5) 81,023 2,352,916 125,859Financial assets carried at cost - non-current 4(6) 57,350 1,665,433 4,157,228Long-term equity investments accounted for under the equity method 4(7) 218,758 6,352,742 5,911,784Cash surrender value of life insurance 3,975 115,434 112,700Prepaid for long-term investments 4(6) 1,033 30,000 -Other financial assets - non-current 6 54 1,552 1,548

Total funds and investments 370,716 10,765,590 12,129,644Property, Plant and Equipment, Net 4(8)

and 6CostLand 136,348 3,959,555 1,779,860Buildings 818,981 23,783,220 20,101,112Machinery and equipment 710,516 20,633,371 23,195,634Molding equipment 82,918 2,407,932 2,168,664Computer and communication equipment 52,095 1,512,840 1,577,409Testing equipment 314,388 9,129,829 8,903,472Transportation equipment 7,786 226,107 237,344Office equipment 72,113 2,094,147 1,851,522Leasehold improvements 6,555 190,349 190,800Other equipment 3,104 90,146 34,516

Revaluation increments 21,367 620,497 620,497Cost and revaluation increments 2,226,171 64,647,993 60,660,830Less: Accumulated depreciation ( 1,117,681 ) ( 32,457,450 ) ( 30,318,850 )

Accumulated impairment loss ( 21,064 ) ( 611,693 ) ( 23,486 )Construction in progress and prepayments for equipment 114,655 3,329,580 6,599,291

Total property, plant and equipment, net 1,202,081 34,908,430 36,917,785Intangible Assets

Trademarks 4(9) 14,218 412,890 -Patents 11,875 344,861 628,035Goodwill 10(10) 236,093 6,856,128 6,898,970Deferred pension costs 175 5,094 9,299Other intangible assets 4(10) 141,675 4,114,239 4,560,628

Total intangible assets 404,036 11,733,212 12,096,932Other Assets

Assets leased to others 4(11) 44,037 1,278,851 205,337Idle assets 4(12) - - -Refundable deposits 5,258 152,684 103,306Deferred expenses 6 37,902 1,100,676 845,367Other assets - other 2,046 59,406 888,026

Total other assets 89,243 2,591,617 2,042,036TOTAL ASSETS $ 6,263,381 $ 181,888,597 $ 193,193,979

(Continued)

DELTA ELECTRONICS, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS (CONTINUED)

DECEMBER 31,(EXPRESSED IN THOUSANDS OF DOLLARS)

US Dollars New Taiwan DollarsLIABILITIES AND STOCKHOLDERS' EQUITY Notes 2012 (Unaudited) 2012 2011

The accompanying notes are an integral part of these consolidated financial statements.See report of independent accountants dated March 11, 2013.

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Current LiabilitiesShort-term loans 4(14) $ 173,460 $ 5,037,267 $ 17,599,492

Financial liabilities at fair value through profit or loss - current 4(15) 905 26,286 4,257

Derivative financial liabilities for hedging - current 10(9) 508 14,750 46,873

Accounts payable 925,070 26,864,029 30,271,738

Accounts payable - related parties 5 6,283 182,467 118,374

Income tax payable 4(23) 79,093 2,296,864 2,092,919

Accrued expenses 392,212 11,389,826 11,268,694

Other payables 96,686 2,807,771 2,983,192

Receipts in advance 50,097 1,454,815 1,051,540

Long-term liabilities - current portion 4(16) 2,511 72,933 857,832

Liabilities directly associated with non-current assets classified as heldfor sale 4(13) 235,442 6,837,219 -

Other current liabilities 58,918 1,710,975 2,457,898

Total current liabilities 2,021,185 58,695,202 68,752,809

Long-term LiabilityLong-term loans 4(16) 567,890 16,491,517 24,862,247

ReserveLand value incremental reserve 4(8) 4,128 119,864 119,864

Other LiabilitiesAccrued pension liabilities 4(17) 94,574 2,746,430 2,617,949

Guarantee deposits received 2,987 86,753 77,332

Deferred income tax liabilities - non-current 4(23) 142,838 4,148,016 3,867,305

Other liabilities - other 6,783 196,989 410,804

Total other liabilities 247,182 7,178,188 6,973,390

Total liabilities 2,840,385 82,484,771 100,708,310

Stockholders' EquityCapital

Common stock 4(18) 833,739 24,211,780 24,033,974

Capital Reserves 4(19)Paid-in capital in excess of par value of common stock 495,341 14,384,691 13,242,489

Capital reserve from conversion of convertible bonds 353,079 10,253,416 10,253,416

Capital reserve - other 60,778 1,765,000 3,013,550

Retained EarningsLegal reserve 4(20) 418,859 12,163,682 11,064,579

Special reserve 56,079 1,628,536 4,796,006

Undistributed earnings 4(21) 785,327 22,805,885 13,045,300

Other Adjustments to Stockholders' EquityCumulative translation adjustments ( 147,632 ) ( 4,287,240 ) ( 1,716,140 )

Unrecognized pension cost ( 9,791 ) ( 284,342 ) ( 263,401 )

Unrealized gain or loss on financial instruments ( 9,692 ) ( 281,431 ) ( 176,551 )

Asset revaluations 4(8) 18,167 527,556 527,556

Amount recognised directly in equity relating to non-current assets heldfor sale 4(13) 26,808 778,508 -

Total Parent Company Stockholders' Equity 2,881,062 83,666,041 77,820,778

Minority interest 541,934 15,737,785 14,664,891

Total stockholders' equity 3,422,996 99,403,826 92,485,669

Commitments and Contingent Liabilities 7Subsequent Events 9TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,263,381 $ 181,888,597 $ 193,193,979

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DELTA ELECTRONICS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31,(EXPRESSED IN THOUSANDS OF DOLLARS, EXCEPT FOR EARNINGS PER SHARE DATA)

US Dollars New Taiwan DollarsItems Notes 2012 (Unaudited) 2012 2011


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Operating Revenues 5Sales $ 5,841,572 $ 169,639,243 $ 161,982,404

Sales returns ( 27,359 ) ( 794,497) ( 758,733 )

Sales discounts ( 10,162 ) ( 295,097) ( 319,139 )

Net Sales 5,804,051 168,549,649 160,904,532

Service income 110,547 3,210,275 1,569,807

Net Operating Revenues 5,914,598 171,759,924 162,474,339

Operating Costs 4(25) and 54(4)Cost of goods sold ( 4,397,545 ) ( 127,704,709) ( 127,106,412 )

Service costs ( 65,257 ) ( 1,895,062) ( 751,451 )

Net Operating Costs ( 4,462,802 ) ( 129,599,771) ( 127,857,863 )

Gross profit 1,451,796 42,160,153 34,616,476

Operating Expenses 4(25)Sales and marketing expenses ( 285,264 ) ( 8,284,073) ( 7,235,206 )

General and administrative expenses ( 190,798 ) ( 5,540,757) ( 4,746,613 )

Research and development expenses ( 378,214 ) ( 10,983,334) ( 9,472,996 )

Total Operating Expenses ( 854,276 ) ( 24,808,164) ( 21,454,815 )

Operating income 597,520 17,351,989 13,161,661

Non-operating Income and GainsInterest income 32,038 930,370 881,441

Investment income accounted for under the equity method 4(7) 24,959 724,814 507,550

Dividend income 1,661 48,228 75,672

Gain on disposal of property, plant and equipment 177 5,132 -

Gain on disposal of investments 4(2) 53,881 1,564,707 270,860

Foreign exchange gain, net 7,431 215,800 1,378,264

Rental income 1,922 55,814 30,892

Gain on valuation of financial assets 4(2) 444 12,883 -

Other non-operating income 86,094 2,500,172 1,787,658

Total Non-operating Income and Gains 208,607 6,057,920 4,932,337

Non-operating Expenses and LossesInterest expense ( 13,502 ) ( 392,100) ( 356,773 )

Loss on disposal of property, plant and equipment - - 8,248

Loss on valuation of financial assets - - ( 9,273 )

Loss on valuation of financial liabilities 4(15) ( 905 ) ( 26,286) ( 8,344 )

Other non-operating losses ( 16,708 ) ( 485,186 )( 290,028 )

Total Non-operating Expenses and Losses ( 31,115 ) ( 903,572 ( 672,666

Income from continuing operations before income tax 775,012 22,506,337 17,421,332

Income tax expense 4(23) ( 115,325 ) ( 3,349,038) ( 3,121,356 )

Income from continuing operations 659,687 19,157,299 14,299,976

Loss from discontinued operations 4(13) ( 66,798 ) ( 1,939,811 ) 2,540,948 )( Net of income tax benefit of $20,515 and $295,394,

respectively)Extraordinary gain 10(11)

(Net of income tax expense of $0) - - 205,629

Consolidated net income $ 592,889 $ 17,217,488 $ 11,964,657

Attributable to:Equity holders of the Company $ 554,736 $ 16,109,542 $ 10,991,031

Minority interest 38,153 1,107,946 973,626

$ 592,889 $ 17,217,488 $ 11,964,657

Before Tax After Tax Before Tax After Tax Before Tax After TaxEarnings Per Share (in Dollars) 4(24)Basic Earnings Per Share

Net income from continuing operations $ 0.3216 0.2738 $ 9.34 $ 7.95 $ 7.26 $ 5.96

Loss from discontinued operations ( 0.0282 ) ( 0.0279 ) ( 0.82) ( 0.81) ( 1.19) ( 1.06 )

Extraordinary gain - - - - 0.09 0.09

Minority interest income ( 0.0159 ) ( 0.0159 ) ( 0.46) ( 0.46) ( 0.41) ( 0.41 )

Net income $ 0.2775 0.2300 $ 8.06 $ 6.68 $ 5.75 $ 4.58

Diluted Earnings Per ShareNet income from continuing operations $ 0.3165 0.2693 $ 9.19 $ 7.82 $ 7.12 $ 5.84

Loss from discontinued operations ( 0.0276 ) ( 0.0272 ) ( 0.80) ( 0.79) ( 1.16) ( 1.03 )

Extraordinary gain - - - - 0.08 0.08

Minority interest income ( 0.0155 ) ( 0.0155 ) ( 0.45) ( 0.45) ( 0.40) ( 0.40 )

Net income $ 0.2734 0.2266 $ 7.94 $ 6.58 $ 5.64 $ 4.49

DELT

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~6~

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New

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$11

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$87

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-30

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--

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85,9

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597,

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(Con

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17

DEL

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$92,485,669

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$26,403,107

$12,163,682

$1,628,536

$22,805,885

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($

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($

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$527,556

$778,508

$15,737,785

$99,403,826

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tinue

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DEL

TAEL

ECTR

ON

ICS,

INC

.AN

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SC

ON

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USD

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$912,860

$381,012

$165,152

$449,218

($

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($

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($

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$3,184769

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--

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Bala

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1,20

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833,739

$909,198

$418,859

$56,079

$785,327

($

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($

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($

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$18,167

$26,808

$541,934

$3,442,996

The

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See

repo

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inde

pend

enta

ccou

ntan

tsda

ted

Mar

ch11

,201

3.

19

DELTA ELECTRONICS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,(EXPRESSED IN THOUSANDS OF DOLLARS)

US Dollars New Taiwan Dollars

2012 (Unaudited) 2012 2011

~9~

CASH FLOWS FROM OPERATING ACTIVITIES

Consolidated net income $ 592,889 $ 17,217,488 $ 11,964,657

Adjustments to reconcile net income to net cash provided by operating activities

Extraordinary gain - 205,629

Changes in unrealized valuation of financial assets ( 684 ) ( 19,868 ) 65,170

Changes in unrealized valuation of financial liabilities 697 20,236 7,538

Provision for doubtful accounts 3,828 111,172 97,466

Provision for inventory obsolescence and market price decline 254 7,371 678,673

(Reversal of) loss on purchase commitment ( 5,050 ) ( 146,653 ) 202,043

Gain on disposal of investments ( 53,881 ) ( 1,564,707 ) ( 270,860 )

Investment income recognized under equity method ( 24,959 ) ( 724,814 ) ( 507,550 )

Cash dividends received from investee companies accounted for under the equity method 10,344 300,395 598,969

Depreciation (including assets leased to others) 225,431 6,546,504 5,450,880

Amortization 51,049 1,482,457 1,060,370

Loss on disposal of property, plant and equipment, net 45 1,306 11,094

Changes in assets and liabilities

Notes receivable 326 9,472 331,663

Accounts receivable ( 17,178 ) ( 498,856 ) ( 640,091 )

Accounts receivable - related parties ( 18,219 ) ( 529,088 ) 3,229,681

Other receivables 46,258 1,343,320 ( 811,394 )

Inventories 114,902 3,336,742 ( 2,660,567 )

Prepayments ( 68,934 ) ( 2,001,826 ) ( 778,021 )

Deferred tax assets ( 7,185 ) ( 208,660 ) ( 250,567 )

Other current assets 4,065 118,043 49,265

Other assets - other 10,242 297,434 517,581

Accounts payable ( 98,294 ) ( 2,854,448 ) ( 974,733 )

Accounts payable - related parties 2,207 64,093 ( 2,265,514 )

Income tax payable 7,023 203,945 261,026

Accrued expenses 11,903 345,677 351,585

Other payables 8,488 246,481 601,531

Receipts in advance 14,512 421,438 314,451

Other current liabilities ( 12,153 ) ( 352,916 ) 787,122

Accrued pension liabilities 4,424 128,481 487,867

Deferred tax liabilities 12,633 366,870 ( 228,661 )

Other liabilities ( 1,224 ) ( 35,538 ) 186,312

Net cash provided by operating activities 813,759 23,631,551 18,072,615

(Continued)

DELTA ELECTRONICS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31(EXPRESSED IN THOUSANDS OF DOLLARS)

US Dollars New Taiwan Dollars

2012 (Unaudited) 2012 2011


~10~

CASH FLOWS FROM INVESTING ACTIVITIESDecrease in financial assets held for trading $ 157 $ 4,557 $ -

Decrease in other financial assets 3,473 100,869 1,302,640

Increase in available-for-sale financial assets ( 2,092 ) ( 60,765 ) ( 147,000 )

Proceeds from disposal of available-for-sale financial assets 18,906 549,031 290,437

Cash dividends received from available-for-sale financial assets during the year of conversion 4,059 117,872 -

Increase in financial assets carried at cost ( 13,828 ) ( 401,559 ) ( 3,030,367 )

Proceeds from disposal of financial assets carried at cost 5,150 149,550 168,854

Proceeds from capital reduction of financial assets carried at cost 209 6,059 750

Increase in long-term equity investments accounted for under the equity method - - ( 90,825 )

Proceeds from disposal of investments in long-term equity investment accounted for underthe equity method 30 859 403,785

Acquisition price of subsidiary - - ( 6,098,012 )

Increase in cash surrender value of life insurance ( 94 ) ( 2,734 ) ( 9,009 )

Increase in prepaid long-term investment ( 1,033 ) ( 30,000 ) -

Acquisition of property, plant and equipment ( 378,665 ) ( 10,996,419 ) 14,130,018

Proceeds from disposal of property, plant and equipment 10,036 291,453 839,954

Increase in other intangible assets ( 14,994 ) ( 435,430 ) -

(Increase) decrease in refundable deposits ( 2,059 ) ( 59,781 ) 43,452

Increase in deferred expenses ( 39,140 ) ( 1,136,623 ) ( 949,273 )

Decrease in other assets - other 59 1,715 116

Purchase of minority interest - - ( 485,678 )

Proceeds form disposal of equity in subsidiaries to minority shareholders 905 26,273 -

Net cash used in investing activities ( 408,921 ) ( 11,875,073 ) ( 21,890,194 )

CASH FLOWS FROM FINANCING ACTIVITIES(Decrease) increase in short-term loans ( 368,753 ) ( 10,708,580 ) 5,179,329

(Decrease) increase in long-term loans ( 200,471 ) ( 5,821,699 ) 16,069,239

Increase in guarantee deposits received 194 5,637 18,802

Payment of cash dividends ( 289,853 ) ( 8,417,324 ) ( 12,480,034 )

Employees' stock options 40,875 1,187,011 597,032

Cash dividends declared to minority interests ( 14,238 ) ( 413,486 ) ( 2,308,729 )

Increase in subsidiaries’ capital from minority shareholders 8,853 257,101 1,121

Net cash (used in) provided by financing activities ( 823,393 ) ( 23,911,340 ) 7,076,760

Effect due to changes in exchange rates ( 89,537 ) ( 2,600,151 ) 2,446,694

Effect due to changes in consolidated subsidiaries 3,505 101,788 1,530,035

Cash of subsidiary classified as held for sale at the end of year ( 67,031 ) ( 1,946,553 ) -

(Decrease) increase in cash and cash equivalents ( 571,618 ) ( 16,599,778 ) 7,235,910

Cash and cash equivalents at beginning of year 2,331,127 67,695,906 60,459,996

Cash and cash equivalents at end of year $ 1,759,509 $ 51,096,128 $ 67,695,906

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATIONCash paid during the year for interest $ 16,091 $ 467,291 $ 372,113

Cash paid during the year for income tax $ 103,764 $ 3,013,309 $ 2,892,648

NON-CASH FLOWS FROM FINANCING ACTIVITIESCash dividends declared but not yet paid to minority interest $ - $ - $ 58,401

FAIR VALUE OF ASSETS AND LIABILITIES OF THE ACQUIRED SUBSIDIARY WEREAS FOLLOWS:

Cash and cash equivalents $ 3,505 $ 101,788 $ 1,530,035

Other current assets 100 2,918 10,301,783

Funds and investments - - 324,950

Property, plant and equipment 45,613 1,324,614 781,091

Goodwill 475 13,793 1,740,298

Other intangible assets - - 1,777,023

Other assets 43,925 1,275,575 75,489

Other current liabilities ( 100 ) ( 2,916 ) ( 7,843,879 )

Other liabilities ( 165 ) ( 4,800 ) ( 62,623 )

Minority interest ( 28 ) ( 820 ) ( 2,157,429 )

Subtotal 93,325 2,710,152 6,466,738

Investment cost before merger (shown as financial assets carried at cost - non-current) ( 93,325 ) ( 2,710,152 ) ( 368,726 )

Cash paid to acquire subsidiary $ - $ - $ 6,098,012

21

~11~

DELTA ELECTRONICS, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2012 AND 2011(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT AS OTHERWISE INDICATED)

1. HISTORY AND ORGANIZATION

(1) Delta Electronics, Inc. (the Company) was incorporated in 1971 under the provisions of the

Company Law of the Republic of China (R.O.C.) as a company limited by shares and was listed on

Taiwan Stock Exchange Corporation (TSEC) since December 1988. The main activities of the

Company are the installation of electronic control systems and manufacturing of communication

products and components, computer information system and power supply.

(2) On October 28, 2010, the Board of Directors of the Company adopted a resolution to conduct a

simple merger with a 94.89% owned subsidiary – PreOptix Co., Ltd. (PreOptix) in accordance with

Article 19 of Business Mergers and Acquisitions Act. PreOptix was the dissolved company and the

Company was the surviving company after the consolidation. The effective date was March 1,

2011.

(3) As of December 31, 2012, the Company had approximately 5,400 employees and all consolidated

entities had approximately 68,000 employees.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements of the Company and its subsidiaries (collectively referred herein

as the Group) are prepared in accordance with the “Rules Governing the Preparation of Financial

Statements by Securities Issuers” and generally accepted accounting principles in the Republic of

China. The Group’s significant accounting policies are summarized as follows:

(1) Basis for preparation of consolidated financial statements

A. All majority-owned subsidiaries and controlled entities are included in the consolidated

financial statements and the Company prepares consolidated financial statements on a quarterly

basis. The income (loss) of the subsidiaries is included in the consolidated statement of

income effective the date on which the Company gains control over the subsidiaries. The

income (loss) of the subsidiaries is excluded from the consolidated statement of income

effective the date on which the Company loses control over the subsidiaries.

Significant intercompany transactions and assets and liabilities arising from intercompany

transactions are eliminated.

~12~

B. Subsidiaries included in the consolidated financial statements and their changes in 2012 were asfollows:

Investor Subsidiary Main activities 2012 2011 DescriptionDelta Electronics,Inc.

DeltaInternationalHolding Ltd.(DIH)

Equity investments 94.00 94.00

Delta Electronics,Inc.

Delta NetworksHolding Ltd.(DNH)



Deltronics(Netherlands)B.V. (DEN)

Trading of equipment,components andmaterials of telecomand computersystems

100.00 100.00


DelSolar Co., Ltd.(DelSolar)

Manufacturing ofsolar batteries andrelated systems

42.40 59.04 Note A


PreOptix (HongKong) Co., Ltd.(PHK)



NeoEnergyMicroelectronics,Inc. (NEM)

Designing andexperimenting onintegrated circuit andinformation softwareservices

83.11 80.68


Cyntec Co., Ltd.(Cyntec)

Research, development,manufacturing andsales of film optic-electronics devices

100.00 100.00


DelBio Inc.(DelBio)

Manufacturing,wholesale and retail ofmedical equipment

100.00 100.00


Delta ElectronicsCapital Company(Delta Capital)


Ownership (%)as of December 31,

23~13~

Investor Subsidiary Main activities 2012 2011 Description



Delta ElectronicsInt'l (Singapore)Pte. Ltd. (DEIL-SG)

Sales of electronicproducts

100.00 100.00


Delta SmartGreen Life Co.,Ltd. (DSGL)

Research anddevelopment, energytechnology, meeting,exhibition, and leaseservices, etc.

100.00 - Note B


Allied MaterialTechnology Corp.(AMT)

Manufacturing andsales of color filter andlease services, etc.

99.97 99.97 Note C


Delta RobotAutomatic Co.,Ltd. (Delta Robot)

Research, designing,development,manufacturing andsales of intelligentrobot systems andautomationengineering, etc.

100.00 - Note B

Delta InternationalHolding Ltd. (DIH)

Delta Electronics(H.K.) Ltd.(DHK)

Equity investments,operations managementand engineeringservices

100.00 100.00


Delta ElectronicsInternational Ltd.(DEIL-Labuan)


100.00 100.00


Delta PowerSharp Ltd. (DPS)

Operations andengineering services

100.00 100.00


DEI Logistics(USA) Corp.(ALI)

Warehousing andlogistics services

100.00 100.00

~14~




Delta Electronics(Japan), Inc.(DEJ)

Sales of powerproducts, displaysolution productselectronic components,industrial automationproducts and theirmaterials

100.00 100.00


DAC Holding(Cayman) Ltd.(DAC)



Ace PillarHolding Co., Ltd.(Ace)

Equity investments 100.00 100.00 Note D





Drake OverseasFinancialInvestment Ltd.(Drake)

Equity investments 100.00 100.00 Note E


Delta Greentech(China) Co., Ltd.(DGC)

Manufacturing andsales of uninterruptiblepower systems

10.38 10.38 Note F

Delta Electronics(H.K.) Ltd. (DHK)

Delta Electronics(Dongguan) Co.,Ltd. (DDG)

Manufacturing andsales of transformer andpower supplies

100.00 100.00


Delta ElectronicsPower(Dongguan) Co.,Ltd. (DEP)

Manufacturing andsales of transformer andpower supplies

100.00 100.00


Delta Electronics(Shanghai) Co.,Ltd. (DPEC)

Product design andmanagement consultingservice, etc.

100.00 100.00

25~15~




Delta Electronics(Jiangsu) Ltd.(DWJ)

Manufacturing andsales of power suppliesand transformers

55.00 55.00


Delta ElectronicsComponents(Wujiang) Ltd.(DWC)

Manufacturing andsales of transformers

55.00 55.00


Delta Electro-Optics (Wujiang)Ltd. (DWO)

Manufacturing andsales of peripherals andelectronic controlequipments

55.00 55.00


Delta VideoDisplay System(Wujiang) Ltd.(DWV)

Manufacturing andsales of variousprojectors

55.00 55.00


Delta Electronics(Wuhu) Co., Ltd.(DWH)


100.00 100.00


Delta Electronics(Chenzhou) Co.,Ltd. (DCZ)

Manufacturing andsales of power suppliesandtransformers

100.00 100.00


Delta ElectronicsInternationalMexico S.A. DEC.V. (DEIL-MX)

Sales of powermanagement ofindustrial automationproduct andtelecommunicationsequipment

100.00 100.00


Delta Electronics(Wujiang)Trading Co., Ltd.(DWT)

Installation, consultingand trading ofelectronic products

100.00 100.00

~16~




Delta Green(Tianjin)Industries Co.,Ltd. (DGT)

Manufacturing andsales of transformersand bluetooth module

100.00 100.00 Note G


PreOptix (JiangSu) Co., Ltd.(PJS)

Manufacturing andsales of lenses andoptical engines forprojectors

100.00 100.00

Delta Electronics(Japan), Inc. (DEJ)

AddtronTechnology(Japan), Inc. (ATJapan)

Trading of networkingsystem and peripherals

100.00 100.00

Delta Electronics(Japan), Inc. (DEJ)

Delta Electronics(Korea), Inc.(Delta Korea)

Sales of powerproducts, displaysolution productselectronic components,industrial automationproducts and theirmaterials

100.00 100.00


Delta ElectronicsMexico S.A. DEC.V. (DEM)

Manufacturing andsales of electronicproducts

100.00 100.00


Delta VideoTechnology Ltd.(DVT)


100.00 100.00

Drake OverseasFinancialInvestment Ltd.(Drake)

Drake Investment(HK) Ltd. (Drake-HK)

Equity investments 100.00 100.00 Note E

Ace Pillar HoldingCo., Ltd. (Ace)



3.81 3.81 Note F

Drake Investment(HK) Ltd. (Drake-HK)



48.51 48.51 Note F

27~17~




Wuhu DeltaTechnology Co.,Ltd. (WDT)


100.00 100.00


Delta EnergyTechnology(Wuhu) Co., Ltd.(DET-WH)

Research anddevelopment of energy-saving technology,energy-savingequipment, energymanagement systemand technologyconsulting service, etc.

30.00 - Note B


Chenzhou DeltaTechnology Co.,Ltd. (CDT)


100.00 100.00


Delta EnergyTechnology(Chenzhou) Co.,Ltd. (DET-CZ)


30.00 - Note B

Delta Electronics(Dongguan) Co.,Ltd. (DDG)

Delta EnergyTechnology(Dongguan) Co.,Ltd. (DET-DG)


30.00 - Note B

~18~



Delta Electro-Optics (Wujiang)Ltd. (DWO)

Delta EnergyTechnology(Wujiang) Co.,Ltd. (DET-WJ)


30.00 - Note B


Delta EnergyTechnology(Wuhu) Co., Ltd.(DET-WH)


70.00 - Note B


Delta EnergyTechnology(Chenzhou) Co.,Ltd. (DET-CZ)


70.00 - Note B


Delta EnergyTechnology(Wujiang) Co.,Ltd. (DET-WJ)


70.00 - Note B

29

~19~




Delta EnergyTechnology(Dongguan) Co.,Ltd. (DET-DG)


70.00 - Note B


Delta EnergyTechnology(Shanghai) Co.,Ltd. (DET-SH)


10.00 - Note B


Delta EnergyTechnology(Shanghai) Co.,Ltd. (DET-SH)


90.00 - Note B

Delta NetworksHolding Ltd.(DNH)

Delta Networks,Inc. (DNICayman)


Delta Networks,Inc. (DNI Cayman)

Delta Networks,Inc. (Taiwan)(DNIT)

Manufacturing andsales of networkingsystem and peripherals

99.98 99.98


DNI Logistics(USA) Corp.(ALN)


100.00 100.00


Delta NetworksInternational Ltd.(DNIL-Labuan)


100.00 100.00

~20~




Delta Networks(H.K.) Ltd.(DNHK)



Delta Networks(Dongguan) Ltd.(DII)

Manufacturing andsales of other radiotransmission apparatus,incorporating receptionapparatus and otherradio-broadcastreceivers, combinedwith sound recording orreproducing apparatus

100.00 100.00


Delta Networks(Shanghai) Ltd.(DNS)

Design of computersoftware

100.00 100.00


Delta Networks(Xiamen) Ltd.(DNX)

Operation of radiotransmission apparatus,and automatic dataprocessing, reception,conversion andtransmission orregeneration of voice,images or other data ofthe machine, includingswitches and routers,with a special programto control a computer orword processor withmemory business

100.00 100.00

Delta Networks,Inc. (Taiwan)(DNIT)

AyecomTechnology Co.,Ltd. (Ayecom)

Manufacturing andsales of wire andwirelesstelecommunicationsequipment, electronicparts and controlledtelecommunicationsradio frequency devices

100.00 100.00

31~21~




DelSolar Holding(Cayman) Ltd.(DSH)



DelSolar HoldingSingapore Pte.Ltd. (DSH-SG)



DelSolar (H.K.)Ltd. (DSHK)



DelSolar USHoldings(Delaware)Corporation(DSUS)


DelSolar HoldingSingapore Pte. Ltd.(DSH-SG)

DelSolar IndiaEPC CompanyPrivate Ltd. (DSIndia)

Contractor of solarsystems project

100.00 100.00

DelSolar (H.K.)Ltd. (DSHK)

DelSolar(Wujiang) Ltd.(DSWJ)

Manufacturing andsales of solar batteriesand related systems

100.00 100.00

DelSolar USHoldings(Delaware)Corporation(DSUS)

DelSolarDevelopment(Delaware) LLC(DS Delaware)

Design and sale of solarsystem

100.00 100.00


DSS-RAL LLC(DSS)

Contractor of solarsystem

100.00 100.00


DSS-USF-PHXLLC (DSSU)

Contractor of solarsystem

100.00 100.00

~22~

Note A: On November 19, 2012, the Board of Directors of the Company resolved toparticipate in the tender offer by Neo Solar Power Corporation (NSP) of DelSolar.This tender offer transaction was completed on December 24, 2012. DelSolar’s stockownership directly and indirectly held by the Company was reduced to 42.40%. Asthe Company has the ability to exercise significant influence on the appointment ofthe management, operational directions and financial planning of DelSolar, DelSolarwas still included in the consolidated financial statements.

Note B: An investee company newly incorporated in 2012.



Cyntec Co., Ltd.(Cyntec)

Fairview AssetsLtd. (Fairview)


Fairview AssetsLtd. (Fairview)

GrandviewHolding Ltd.(Grandview)



Cyntec Holding(H.K.) Ltd.(CHK)



CyntecInternational Ltd.(CIL-Labuan)

Trading 100.00 100.00

Cyntec Holding(H.K.) Ltd. (CHK)

Cyntec (Suzhou)Co., Ltd. (CSC)

Research, development,manufacturing andsales of new-typeelectronic componentsand wholesale, importand export of similarproducts

100.00 100.00

Cyntec Holding(H.K.) Ltd. (CHK)

CyntecElectronics(Suzhou) Co.,Ltd. (CES)

Research, development,manufacturing andsales of new-typeelectronic components(chip components,sensing elements,hybrid integratedcircuits) and wholesale,import and export ofsimilar products

100.00 100.00

33 ~23~

Note C: The Company acquired 99.97% ownership of AMT with $2,710,152 in 2011.According to the capital increase subscription contract and relevant regulations, theCompany has no control power or significant influence on AMT until thereorganization of AMT is completed and convenes shareholders’ meeting to re-electdirectors. The Taiwan Taoyuan District Court issued 2007 Zheng-Zi Order No. 1 civilruling confirmation certificate to AMT on April 5, 2012 and the special meeting ofshareholders after the reorganization was convened by the joint committee of thereorganizers and the reorganization supervisor to re-elect directors on June 1, 2012.All board seats were elected and control power was gained by the Company. AMTwas included in the consolidated financial statements effective on that day.

Note D: DIH acquired 100% stock ownership in Ace on September 1, 2011, and Ace wasincluded in the consolidated financial statements effective on that day.

Note E: DIH acquired 100% stock ownership in Drake and its subsidiary - Drake-HK onOctober 3, 2011, and Drake and Drake-HK were included in the consolidatedfinancial statements effective on that day.

Note F: In 2011, DIH acquired 100% stock ownership in Ace and Drake, which indirectlyacquired 3.811% and 48.51% stock ownership, respectively in DGC. Including theoriginal 10.38% stock ownership held by DIH, the Company’s consolidated stockownership in DCG was 62.701% and DGC was included in the consolidated financialstatements since October 3, 2011.

Note G: DHK acquired 50% stock ownership of DGT on August 1, 2011. As DHK has theability to exercise significant influence on the appointment of the management,operational directions and financial planning of DGT, DGT was included in theconsolidated financial statements since August 1, 2011. On December 1, 2011, DHKincreased its ownership percentage to 100%.

The financial statements of the consolidated subsidiaries of DEN, Delta Korea and ALN for theyear ended December 31, 2011 were audited by other independent accountants. As ofDecember 31, 2011, the total assets of these subsidiaries amounted to $1,051,049, constituting0.54% of the consolidated total assets, and the total operating revenues were $3,291,816,constituting 2.03% of the consolidated total operating revenues for the year then ended.

C. Subsidiaries not included in the consolidated financial statements: None.D. Adjustments for subsidiaries with different balance sheet dates: None.E. Difference in the accounting policies adopted between the Company and the subsidiaries: None.F. Special operating risk of foreign subsidiaries: None.G. Nature and extent of the restrictions on fund remittance from subsidiaries to the parent company:

None.H. Details of the parent’s stock that is held by the subsidiary: None.

~24~

I. The related information regarding a subsidiary’s issuance of convertible bonds and newcommon stock: The issuance of convertible bonds and new common stock by subsidiaries hadno significant effect on stockholders’ equity of the parent company.

(2) Translation of financial statements of foreign subsidiariesAssets and liabilities of foreign subsidiaries are translated into New Taiwan dollars using theexchange rates at the balance sheet date. Equity accounts are translated at historical rates except forbeginning retained earnings, which are carried forward from prior year’s balance. Dividends aretranslated at the rates prevailing at the date of declaration. Profit and loss accounts are translated atweighted-average rates of the year. Exchange differences are recorded as cumulative translationadjustments and are included as a component of the stockholders’ equity.

(3) Foreign currency transactionsA. Transactions denominated in foreign currencies are translated into functional currency at the

spot exchange rates prevailing at the transaction dates. Exchange gains or losses due to thedifference between the exchange rate on the transaction date and the exchange rate on the dateof actual receipt and payment are recognized in current year’s profit or loss.

B. Monetary assets and liabilities denominated in foreign currencies are translated at the spotexchange rates prevailing at the balance sheet date. Exchange gains or losses are recognized inprofit or loss.

C. When a gain or loss on a non-monetary item is recognized in profit or loss, any exchangecomponent of that gain or loss shall be recognized in profit or loss. Conversely, when a gainor loss on a non-monetary item is recognized directly in equity, any exchange component ofthat gain or loss shall be recognized directly in equity. However, non-monetary items that aremeasured on a historical cost basis are translated using the exchange rate at the date of thetransaction.

(4) Classification of current and non-current itemsA. Assets that meet one of the following criteria are classified as current assets; otherwise they are

classified as non-current assets:a. Assets arising from operating activities that are expected to be realized or consumed, or are

intended to be sold within the normal operating cycle;b. Assets held mainly for trading purposes;c. Assets that are expected to be realized within twelve months from the balance sheet date;d. Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are

to be exchanged or used to pay off liabilities more than twelve months after the balancesheet date.

B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwisethey are classified as non-current liabilities:a. Liabilities arising from operating activities that are expected to be paid off within the

normal operating cycle;

35 ~25~

b. Liabilities arising mainly from trading activities;c. Liabilities that are to be paid off within twelve months from the balance sheet date;d. Liabilities for which the repayment date cannot be extended unconditionally to more than

twelve months after the balance sheet date.(5) Cash equivalents

Cash equivalents are short-term, highly liquid investments that are readily convertible to knownamounts of cash and which are subject to insignificant risk of change in value resulting fromfluctuations in interest rate.The Group’s statement of cash flows is prepared on the basis of cash and cash equivalents.

(6) Settlement date accountingIf an entity recognizes financial assets using settlement date accounting, any change in the fair valueof the asset to be received during the period between the trade date and the settlement date is notrecognized for assets carried at cost or amortized cost. For financial asset or financial liabilityclassified as at fair value through profit or loss, the change in fair value is recognized in profit orloss. For available-for-sale financial asset, the change in fair value is recognized directly in equity.

(7) Financial assets and financial liabilities at fair value through profit or lossA. Derivative financial instruments and convertible bonds are recognized and derecognized using

settlement date accounting and are recognized initially at fair value.B. Financial assets and financial liabilities at fair value through profit or loss are subsequently

remeasured and stated at fair value, and the gain or loss is recognized in profit or loss. Thefair value of listed stocks and OTC stocks is based on latest quoted fair prices at the balancesheet date. If the convertible bonds were invested before the adoption of EITF 99-256 of theAccounting Research and Development Foundation, R.O.C., dated October 8, 2010,“Accounting for private placement of convertible bonds,” when the fair value of the derivativesembedded in the hybrid instruments cannot be measured reliably, they are subsequentlyremeasured and stated at cost.

C. Financial assets and financial liabilities are designated as financial assets and liabilities at fairvalue through profit or loss when either of the following conditions is met:a. The financial asset or financial liability designated is a hybrid contract.b. It eliminates or significantly reduces a measurement or recognition inconsistency.c. It is designated and its performance is evaluated on a fair value basis.

(8) Available-for-sale financial assetsA. Equity investments are recognized and derecognized using trade date accounting and are

recognized initially at its fair value plus transaction costs that are directly attributable to theacquisition of the financial asset.

B. Available-for-sale financial assets are remeasured and stated at fair value and the gain or loss isrecognized in equity. When the financial assets are derecognized, the cumulative gain or lossshall be removed from equity and recognized in profit or loss. The fair value of listed stocks

~26~

and OTC stocks is based on latest quoted fair prices at the balance sheet date.C. If there is any objective evidence that the financial asset is impaired, the cumulative loss that

had been recognized directly in equity shall be removed from equity and recognized in profit orloss. Impairment losses recognized previously in profit or loss for an investment in an equityinstrument shall not be reversed through profit or loss, and if, subsequently, the fair value of adebt instrument increases and the increase can be objectively related to an event occurring afterthe impairment loss was recognized in profit or loss, the impairment loss shall be reversed, withthe amount of the reversal recognized in profit or loss.

(9) Financial assets carried at costA. Investment in unquoted equity instruments is recognized or derecognized using trade date

accounting and is stated initially at its fair value plus transaction costs that are directlyattributable to the acquisition of the financial asset.

B. If there is any objective evidence that the financial asset is impaired, the impairment loss isrecognized in profit or loss. Such impairment loss cannot be reversed.

C. The common stocks through private placement which were invested or converted before theadoption of EITF 99-256 of the Accounting Research and Development Foundation, R.O.C.,dated October 8, 2010, “Accounting for private placement of convertible bonds”, were carriedat cost in accordance with EITF 95-243, “Accounting for financial assets with transferrestrictions”, prescribed by the R.O.C. Accounting Research and Development Foundation,dated October 5, 2006, for they had no quoted prices in an active market. Those investmentsafter October 8, 2010 were remeasured based on their estimated fair value and classified asfinancial assets held for trading or available-for-sale financial assets.

(10) Derivative financial instruments for hedgingDerivatives are initially recognized at fair value on the date a contract is entered into and aresubsequently remeasured at their fair value. The method of recognizing the resulting gain or lossdepends on whether the derivative is designated as a hedging instrument and the nature of thehedged item.A. Fair value hedges: Changes in the fair value of derivatives that are designated and qualify as

fair value hedges are recognized in profit or loss. Changes in the fair value of the hedged assetor liability that are attributable to the hedged item are recognized in profit or loss as anadjustment to the carrying amount of the hedged item.

B. Cash flow hedges: The effective portion of changes in the fair value of derivatives that aredesignated and qualify as cash flow hedges is recognized in equity.a. If a hedge of a forecast transaction subsequently results in the recognition of a financial

asset or a financial liability, the associated gains or losses that were recognized directly inequity are transferred to profit or loss in the same period or periods when the hedged itemaffects profit or loss.

37 ~27~

b. If a hedge of a forecast transaction subsequently results in the recognition of anon-financial asset or a non-financial liability, the associated gains and losses that wererecognized directly in equity, are reversed and included in the initial cost or other carryingamount of the asset or liability.

(11) Notes and accounts receivable, other receivables and allowance for doubtful accountsA. Notes receivable and accounts receivable are claims resulting from the sale of goods or

services. Other receivables are those arising from transactions other than the sale of goods orservices. Notes receivable, accounts receivable and other receivables are recognized initiallyat fair value.

B. The Group assesses whether objective evidence of impairment exists individually orcollectively for financial assets that are not individually significant. If there is objectiveevidence that an impairment loss has been incurred, the amount of the loss is recognized andmeasured as the difference between the asset’s carrying amount and the present value ofestimated future cash flows discounted at the financial asset’s original effective interest rate. Ifthe amount of the impairment loss decreases and the decrease can be related objectively to anevent occurring after the impairment was recognized, the previously recognized impairmentloss shall be reversed. The reversal shall not result in a carrying amount of the financial assetthat exceeds what the amortized cost would have been had the impairment not beenrecognized at the date the impairment is reversed. The amount of the reversal shall berecognized in profit or loss.

(12) InventoriesThe Group uses the perpetual inventory system. Inventories are recorded at standard cost andvariances are allocated to inventories and cost of goods sold at the balance sheet date. At the endof year, inventories are evaluated at the lower of cost or net realizable value, and the individualitem approach is used in the comparison of cost and net realizable value. The calculation of netrealizable value is based on the estimated selling price in the normal course of business, net ofestimated costs of completion and estimated selling expenses.

(13) Non-current disposal group classified as held for sale / Discontinued operationsIn accordance with R.O.C. SFAS No. 38, “Non-current Assets Held for Sale and DiscontinuedOperations”, EITF 97-055 of the Accounting Research and Development Foundation, R.O.C.,dated February 22, 2008 “Accounting for the subsidiary classified as held for sale” and EITF97-088 of the Accounting Research and Development Foundation, R.O.C., dated March 14, 2008“Accounting for non-current asset classified as held for sale”, the Company accounts for thesubsidiary classified as held for sale as follows:A. The income (loss) of the subsidiaries is excluded from the consolidated statement of income

effective the date on which the subsidiaries meets the criteria to be classified as held for sale.The assets, liabilities and equity relating to the subsidiaries classified as held for sale shall bepresented separately in the consolidated balance sheet. The subsidiaries classified as held for

~28~

sale shall be measured at the lower of carrying amount and fair value less costs to sell on thedate which the subsidiaries meet the criteria to be classified as held for sale. The carryingamounts of the liabilities shall be measured in accordance with applicable Statements ofFinancial Accounting Standards to determine the amounts of total assets.

B. If the subsidiaries classified as held for sale meet the definition of discontinued operations, theresults of their operations before being classified to the accounts relating to non-currentdisposal group classified as held for sale and the impairment loss recognized when beingclassified to the accounts relating to non-current disposal group classified as held for sale shallbe combined to the net profit or loss after tax of discontinued operations.

(14) Funds and investmentsA. Long-term equity investments accounted for under the equity method

a. Long-term equity investments in which the Company holds more than 20% of the investeecompany’s voting shares or has the ability to exercise significant influence on theinvestee’s operational decisions are accounted for under the equity method. The excessof the initial investment cost over the acquired net asset value of the investee attributableto goodwill is no longer amortized effective January 1, 2006. Retrospective adjustmentof the amount of goodwill amortized in previous years is not required. The excess ofacquired net asset value of investee over the initial investment cost is allocatedproportionately and applied as a reduction to the book values of identifiable non-currentassets, and any remaining amount of such excess after this allocation is credited toExtraordinary gains. However, negative goodwill prior to December 31, 2005 iscontinuously amortized.

b. Pursuant to EITF 92-047 of the Accounting Research and Development Foundation,R.O.C., dated February 25, 2003, of the Republic of China, for shares transfer amongparent company and subsidiaries, the carrying value of long-term investments transferredis the book value of the investment. The difference between payment for the equity andacquisition cost is recorded as capital reserve or retained earnings.

c. When the treatment for a long-term equity investment is changed to the equity methodfrom other methods during the year, the investor company will not adjust retroactively.The book value of the equity investment at the beginning of the year is used as the initialbook value of the long-term equity investment under the equity method. The differencebetween investment cost and underlying equity in net assets is analyzed and dealt with byfollowing the allocation procedures of the acquisition cost specified in R.O.C. SFAS No.25, “Business Combinations – Purchase Method”. If an investor company receives cashdividends from an investee company during the year an investor company changes thetreatment for the long-term equity investment to the equity method, the investment incomeand the long-term equity investment shall be offset if dividends were accounted for asinvestment income under the previous method.

39 ~29~

d. Exchange differences arising from translation of the financial statements of overseasinvestee companies accounted for under the equity method are recorded as “cumulativetranslation adjustments” under stockholders’ equity.

e. The Company credits long-term equity investments accounted for under the equity methodwhen cash dividends are declared by investee companies on ex-dividend date.

B. Cash surrender value of life insuranceThe cash surrender value of life insurance is recorded as an asset and classified as long-terminvestment. The increase in cash surrender value during the period is accounted for as anadjustment to insurance premiums paid.

(15) Business combinationBusiness combination transactions are accounted for in accordance with R.O.C SFAS No. 25,“Business Combination” using the purchase method. Acquisition price is purchase cost pluscosts directly attributable to the acquisition. The excess of the acquisition price over the acquirednet asset fair value of the merged business is recognized as goodwill. The allocation period ofthe acquisition price shall not exceed one year after the date of acquisition.

(16) Property, plant and equipmentA. Property, plant and equipment are stated at cost except for land which is carried at appraised

value.B. Depreciation is provided on a straight-line method over the estimated lives of the assets.

Leasehold improvements are amortized over the term of the lease. Salvage value of the fullydepreciated assets that are still in use is depreciated based on the re-estimated economicservice lives.The Group uses $1 (depending on their respective reporting currency) as salvage value after2001.The estimated useful lives of fixed assets are 2 to 8 years, except for buildings which are 5 to55 years.

C. Major renewals and improvements are capitalized and depreciated accordingly. Maintenanceand repairs are charged to expense as incurred. When an asset is sold or retired, the cost andaccumulated depreciation are removed from the respective accounts and the resulting gain orloss is included in current non-operating results.

D. Assets leased to others are reclassified to “other assets” at their carrying value. Depreciationexpense incurred in current period is accounted for as non-operating expense.

E. Property, plant and equipment that are idle or have no value in use are reclassified to “otherassets” at the lower of their fair value less costs to sell or book value. The resultingdifference is included in current operations. Depreciation provided on these assets is chargedto non-operating expense.

~30~

(17) Intangible assetsA. In accordance with the amendments to R.O.C. SFAS No. 25, “Business Combination”,

goodwill arising from business combination is no longer amortized and should be tested forimpairment annually or more frequently.

B. Trademarksa. Trademarks with finite useful lives are recorded at actual cost, and amortized over the

estimated useful lives based on the straight-line method.b. Certain trademarks which are assessed to generate net cash inflows have indefinite useful

lives and are recorded at actual cost. These are not amoritized and instead are tested forimpairment annually.

C. Land use rights acquired in Mainland China are amortized on a straight-line basis over thecontractual period or other legal rights.

D. Intangible assets other than goodwill, trademarks and land use rights, mainly patents, customerrelationships and technology authorization fees, are amortized on a straight-line basis over3~12 years.

(18) Deferred chargesDeferred charges are recorded at actual cost and amortized over the estimated useful lives basedon the straight-line method.

(19) Impairment of non-financial assetsA. The Group recognizes impairment loss when there is indication that the recoverable amount of

an asset is less than its carrying amount. The recoverable amount is the higher of the fair valueless costs to sell and value in use. The fair value less costs to sell is the amount obtainablefrom the sale of the assets in an arm’s length transaction after deducting any direct incrementaldisposal costs. The value in use is the present value of estimated future cash flows to bederived from continuing use of the asset and from its disposal at the end of its useful life.

B. When the impairment no longer exists, the impairment loss recognized in prior years shall berecovered. However, impairment loss of goodwill is not recoverable.

(20) Retirement planA. Under the defined benefit pension plan, net periodic pension costs are recognized in

accordance with the actuarial calculations. Net periodic pension costs include service cost,interest cost, expected return on plan assets, and amortization of unrecognized net transitionobligation and gains or losses on plan assets. Unrecognized net transition obligation isamortized on a straight-line basis over the employees’ remaining service period.

B. Under the defined contribution pension plan, net periodic pension costs are recognized asincurred.

(21) Income taxA. The Group adopts inter-period and intra-period allocation of income tax. Over or under

provision of prior years’ income tax liabilities is included in the current year’s income taxexpense. When a change in the tax laws is enacted, the deferred tax liability or asset isrecomputed accordingly in the period of change. The difference between the new amount

41 ~31~

and the original amount, that is, the effect of changes in the deferred tax liability or asset, isrecognized as an adjustment to current income tax expense (benefit).

B. An additional 10% tax is levied on the unappropriated retained earnings and is recorded asincome tax expense in the year the stockholders resolve to retain the earnings.

C. The Company and subsidiaries registered in Taiwan adopt the “Income Basic Tax Act”. Ifthe amount of regular income tax is equal or more than the amount of basic tax, the income taxpayable shall be calculated in accordance with the Income Tax Act and other relevant laws.Whereas, if the amount of regular income tax is less than the amount of basic tax, the incometax payable shall be equal to the basic tax. The difference between the regular income taxand basic tax shall not be subject to deductions of investment tax credits granted under theprovisions of other laws.

(22) Share-based payment - employee compensation planA. The employee stock options granted from January 1, 2004 through December 31, 2007 are

accounted for in accordance with EITF 92-070, EITF 92-071 and EITF 92-072 of theAccounting Research and Development Foundation, R.O.C., dated March 17, 2003. Under theshare-based employee compensation plan, compensation cost is recognized using the intrinsicvalue method and pro forma disclosures of net income and earnings per share is preparedunder the fair value method.

B. When share-based payment awards held by employees of the acquiree are replaced by theacquirer’s share-based payment awards due to a business combination and are changed to besettled by the equity instruments of the acquirer, the services already received, which aremeasured by reference to the fair value of the equity instruments granted, should berecognized as acquisition cost for the vested portion, and the unvested portion shall beaccounted for as payroll expenses of the acquiree during the remaining vesting period, inaccordance with EITF 97-017 of the Accounting Research and Development Foundation,R.O.C., dated January 18, 2008, “Accounting for Share-based Payment Transactions Providedby Stockholders or Affiliated Companies”.

(23) Employees’ bonuses and directors’ and supervisors’ remunerationEffective January 1, 2008, pursuant to EITF 96-052 of the Accounting Research and DevelopmentFoundation, R.O.C., dated March 16, 2007, “Accounting for Employees’ Bonuses and Directors’and Supervisors’ Remuneration”, the costs of employees’ bonuses and directors’ and supervisors’remuneration are accounted for as expenses and liabilities, provided that such recognition isrequired under legal or constructive obligation and the amounts can be estimated reasonably.However, if the accrued amounts for employees’ bonuses and directors’ and supervisors’remuneration are significantly different from the distributed amounts resolved by the Board ofDirectors, then the differences shall be adjusted retroactively in current year’s gain or loss and, ifthe accrued amounts for employees’ bonuses and directors’ and supervisors’ remuneration aresignificantly different from the actual distributed amounts resolved by the stockholders at theirannual stockholders’ meeting subsequently, the differences shall be recognized as gain or loss in

~32~

the following year. In addition, according to EITF 97-127 of the Accounting Research andDevelopment Foundation, R.O.C., dated March 31, 2008, “Criteria for Listed Companies inCalculating the Number of Shares of Employees’ Stock Bonus”, the Company calculates thenumber of shares of employees’ stock bonus based on the closing price of the Company’s commonstock at the previous day of the stockholders’ meeting held in the year following the financialreporting year, and after taking into account the effects of ex-rights and ex-dividends.

(24) Earnings per shareA. The Company has a complex capital structure. Pursuant to the R.O.C. SFAS No. 24,

“Accounting for Earnings Per Share”, an enterprise with complex capital structure shallpresent both basic EPS and diluted EPS. The calculations of basic EPS and diluted EPS areas follows:a. Basic EPS: The amount of earnings (or loss) per share is computed by dividing the amount

of net income (or loss) attributable to common stock outstanding for the reporting periodby the weighted average number of common shares outstanding during that period.

b. Diluted EPS: The calculation of diluted EPS is consistent with the calculation of basic EPSassuming that all dilutive potential common shares have been converted into commonshares at the beginning of the reporting period and the amount of net income (or loss)attributable to common stock outstanding for the reporting period has been adjusted by theafter-tax effect of any other changes in income or expense that would result from theconversion of the dilutive potential common shares.

B. The Company’s potential common shares are the employee stock options issued by theCompany and employees’ bonus that could be distributed in the form of stock. The treasurystock method will be used to test whether or not potential common shares have dilutive effectin calculating diluted EPS.

(25) Revenue, cost and expense recognitionA. Revenue is recognized when the earning process is substantially completed and is realized or

realizable. Costs and expenses are recorded as incurred.B. Partial software and solar cell module installation revenue is recognized based on the

percentage of completion of the transaction at the balance sheet date, if all of the followingconditions are met:a. The amount of the revenue can be measured reliably;b. It is probable that the economic benefits related to the transaction will flow to the

enterprise;c. The costs incurred and to be incurred associated with the transaction can be measured

reliably; andd. The degree of completion of the transaction can be measured reliably at the balance sheet

date.

43 ~33~

(26) Accounting estimatesThe preparation of consolidated financial statements in conformity with generally acceptedaccounting principles in the Republic of China requires management to make estimates andassumptions that affect the amounts of assets and liabilities and disclosure of contingent assets andliabilities at the balance sheet date and reported amounts of revenues and expenses during thereporting period. Actual results could differ from those assumptions and estimates.

(27) Operating segmentsOperating segments are reported in a manner consistent with the internal reporting provided to thechief operating decision-maker. The chief operating decision-maker is responsible for allocatingresources and assessing performance of the operating segments.

3. CHANGES IN ACCOUNTING PRINCIPLES(1) Notes receivable, accounts receivable and other receivables

Effective January 1, 2011, the Group adopted the amended Statement of Financial AccountingStandards No. 34, “Financial Instruments: Recognition and Measurement”. Under the amendedstandard, if there is any objective evidence that the notes and accounts receivable, other receivablesand other rights of credit are impaired, an impairment loss (or provision for doubtful accounts) isrecognized immediately. The adoption of this regulation had no significant effect on the financialstatements.

(2) Operating segmentsEffective January 1, 2011, the Group adopted R.O.C. SFAS No. 41, “Operating Segments” whichsupersedes R.O.C. SFAS No. 20, “Segment Reporting”. Segment information for prior years shallbe re-prepared when the Group applies this standard for the first time. However, this adoption hadno effect on the Group’s consolidated net income and earnings per share for the year endedDecember 31, 2011.

4. DETAILS OF SIGNIFICANT ACCOUNTS(1) Cash and cash equivalents

2012 2011Cash on hand 5,885$ 6,702$Checking and demand deposits 27,098,669 32,446,230Time deposits 25,868,162 35,202,990Cash equivalents-commercial paper 69,965 39,984

53,042,681 67,695,906Classified to non-current assets held for sale 1,946,553)( -

51,096,128$ 67,695,906$

December 31,

~34~

As of December 31, 2012 and 2011, the Group’s overseas checking and demand deposits were$13,834,552 (USD 472,393 thousand, HKD 13,581 thousand, JPY 10,555 thousand, MYR 18thousand, PLN 40 thousand, EUR 65 thousand, GBP 9 thousand, CZK 22,578 thousand, and RMB5,124 thousand ) and $14,611,108 (USD 430,245 thousand, HKD 19,237 thousand, JPY 38,591thousand, THB 14 thousand, PLN 44 thousand, EUR 306 thousand, GBP 9 thousand, CZK 13,397thousand and RMB 304,359 thousand), respectively. The overseas time deposits were $1,907,812(RMB 79,800 thousand and USD 53,000 thousand) and $7,205,450 (USD 23,800 thousand),respectively.

(2) Financial assets at fair value through profit or loss

A. The Group recognized a net gain of $261,110 and $678,350 for the years ended December 31,2012 and 2011, respectively.

B. The private placement of convertible bonds of $720,000 held by the Company was investedbefore the adoption of EITF 99-256 of the Accounting Research and Development Foundation,R.O.C., dated October 8, 2010, “Accounting for private placement of convertible bonds”, andare designated as financial assets at fair value through profit or loss and are subsequentlyremeasured and stated at cost. Since they are hybrid instruments, the fair value of derivativesembedded in the bonds cannot be measured reliably. If there is any objective evidence that thebonds are impaired, the impairment loss is recognized.

C. The private placement of convertible bonds of Dynapack International Technology Corporation(Dynapack) held by the Company was converted into private placement common stocks in thefirst quarter of 2012. In accordance with Paragraph 21 and Appendix Illustration 23 of R.O.C.SFAS No. 34 and EITF 99-256 of the Accounting Research and Development Foundation,R.O.C., dated October 8, 2010, “Accounting for private placement of convertible bonds”, the

2012 2011Current items:

Designated as at fair value through profit or lossConvertible bonds 720,000$ -$

Financial assets held for tradingListed stocks 7,464 12,021Adjustment of financial assets held for trading 5,821 9,679)(

733,285$ 2,342$Non-current items:

Designated as at fair value through profit or lossConvertible bonds 250,000$ 1,830,000$

Adjustment of designated as at fair valuethrough profit or loss 2,487)( 9,475)(

247,513$ 1,820,525$

December 31,

45 ~35~

Company reclassified the estimated fair value of $2,602,437 to available-for-sale financialassets based on latest quoted fair prices of Dynapack’s OTC stocks at the conversion date andconsidered the limited impact of the lockout period. The difference of $1,719,142 between theabove amount reclassified and the cost of those bonds originally recognized under financialassets at fair value through profit or loss account plus related interest receivable totaling$883,295 was recognized as gain on disposal of investments. The lockout period of the privateplacement common stocks of Dynapack expired in the third quarter of 2012. Consequently,Dynapack’s common stocks can be traded freely, and are subsequently remeasured as listed andOTC stocks.

D. The private placement of convertible bonds of $247,513 held by Delta Capital which wasinvested after the adoption of EITF 99-256 of the Accounting Research and DevelopmentFoundation, R.O.C., dated October 8, 2010, “Accounting for private placement of convertiblebonds”, is subsequeutly remeasured at their estimated fair value.

E. The nature of derivative transactions and related information are summarized as follows:

a. The subsidiaries entered into forward exchange contracts to manage exposures to foreignexchange rate fluctuations of import or export sales. However, the forward exchangetransactions did not meet the criteria for hedge accounting. Therefore, the subsidiaries didnot apply hedge accounting.

b. The forward exchange contracts of certain subsidiaries met all the criteria for hedgeaccounting and the related information is described in Note 10(9).

Financial instruments Contract periodForward exchange contracts:Sell USD / Buy RMB USD 6,000 2012.11.21~2013.01.18Sell USD / Buy SGD SGD 6,379 2012.03.01~2013.07.11Sell USD / Buy CZK CZK 36,500 2012.10.08~2013.01.23Sell USD / Buy NTD USD 12,325 2012.10.09~2013.03.28Buy USD / Sell JPY USD 1,000 2012.12.19~2013.02.26

December 31, 2012Contract amount

(Nominal principal)(in thousands)

Financial instruments Contract periodForward exchange contracts:Sell USD / Buy EUR EUR 2,850 2011.10.14~2012.03.14Buy USD / Sell EUR EUR 1,900 2011.10.05~2012.05.02Sell EUR / Buy NTD EUR 130 2011.10.13~2012.01.31



~36~

(3) Accounts receivable and overdue receivables

A. The Group took out a credit insurance on the accounts receivable from certain main customers,whereby 90% of the receivable amount can be covered when the receivables are uncollectible.

B. The subsidiary entered into an agreement with a financial institution to sell its accountsreceivable. Under the agreement, the subsidiary is not required to bear uncollectible risk ofthe underlying accounts receivable, but is liable for the losses incurred on any business dispute.As of December 31, 2012 and 2011, the outstanding accounts receivable sold to the financialinstitution were as follows:

2012 2011Accounts receivable 35,504,973$ 35,062,312$Less: Allowance for doubtful accounts 408,601)( 353,625)(

35,096,372 34,708,687Overdue receivables (shown as other assets) 70,383 78,441Less: Allowance for doubtful accounts 70,383)( 78,441)(

- -35,096,372 34,708,687

Classified to non-current assets held for sale 117,896)( -34,978,476$ 34,708,687$

December 31,

Purchaser of Accountsaccounts receivable Amount Contract Interest

receivable Limit sold advanced date rate CollateralTaishin 726,000$ 140,036$ -$ 2012.05.23~ - NoneInternational 2013.05.31Bank

December 31, 2012

Purchaser of Accountsaccounts receivable Amount Contract Interest

receivable Limit sold advanced date rate CollateralTaishin 1,120,175$ 146,961$ -$ 2011.04.28~ - NoneInternational 2012.05.31Bank

December 31, 2011

47 ~37~

(4) Inventories

Expense and losses incurred on inventories recognized for the year:

Note : For details of the (reversal of) loss on long-term purchase contract, please refer to Note 7(3).(5) Available-for-sale financial assets

2012 2011Raw materials 4,893,517$ 6,770,010$Work in process 1,829,818 2,012,243Finished goods 9,936,711 11,299,470Inventory in transit 321,840 570,432

16,981,886 20,652,155Less: Allowance for inventory obsolescence and

market price decline 1,199,887)( 1,526,042)(15,781,999 19,126,113

Classified to non-current assets held for sale 320,967)( -15,461,032$ 19,126,113$

December 31,

2012 2011Cost of goods sold 133,071,472$ 137,510,522$(Reversal of) loss on long-term purchase contract

(Note) 146,653)( 202,043Provision for inventory obsolescence and market

price decline 7,371 678,673Others 321,744 131,278

133,253,934 138,522,516Less: Cost of goods sold from discontinued

operations 5,549,225)( 11,416,104)(127,704,709$ 127,106,412$

For the years ended December 31,


Listed (TSE and OTC) stocks 615,496$ 679,608$Adjustment of available-for-sale financial assets 15,123)( 155,595)(

600,373$ 524,013$Non-current items:

Listed (TSE and OTC) stocks 2,634,480$ 189,366$Adjustment of available-for-sale financial assets 281,564)( 63,507)(

2,352,916$ 125,859$

December 31,

~38~

A. For Dynapack’s private placement convertible bonds converted into private placement commonstocks, please refer to Note 4(2)C.

B. The lockout period of the private placement common stocks of Macroblock, Inc. amounting to$45,000 held by the Company expired in the third quarter of 2012. Accordingly, such investmentwas reclassified from financial assets carried at cost to available-for-sale financial assets.

(6) Financial assets carried at cost and prepaid long-term investments

A. The investments held by the Group were measured at cost since the fair value cannot bemeasured reliably.

B. The private placement - OTC stocks held by the Company were invested before the adoption ofEITF 99-256 of the Accounting Research and Development Foundation, R.O.C., dated October8, 2010, “Accounting for private placement of convertible bonds”, and were carried at cost asthey had no quoted prices in an active market. The lockout period has expired. Please refer toNote 4(5)B for details.

C. The Company acquired 99.97% ownership of AMT for $2,710,152 in 2011. According to thecapital increase subscription contract and relevant regulations, the Company has no controlpower or significant influence on AMT until the reorganization of AMT is completed andconvenes shareholders’ meeting to re-elect directors. The Taiwan Taoyuan District Court issued2007 Zheng-Zi Order No. 1 civil ruling confirmation certificate to AMT on April 5, 2012 andthe special meeting of shareholders after the reorganization was convened by the jointcommittee of the reorganizers and reorganization supervisor to re-elect directors was on June 1,2012. All board seats were elected and control power was gained by the Company. AMT wasincluded in the consolidated financial statements effective on that day.

D. Delta Capital participated in the capital increase in cash of Fashion Guide Co., Ltd. for thepurchase of 1,200,000 shares at $25 per share and the effective date was set on January 24,2013. Delta Capital had remitted the payment of $30,000 on December 26, 2012 which was


Unlisted stocks -$ 86,180$Non-current items:

Unlisted stocks 1,703,539$ 4,151,128$Private placement OTC stocks - 45,000

1,703,539 4,196,128Less: Accumulated impairment 38,106)( 38,900)(

1,665,433$ 4,157,228$Prepaid long-term investments

Unlisted stocksFashion Guide Co., Ltd. 30,000$ -$

December 31,

49 ~39~

recorded as prepaid long-term investment.(7) Long-term equity investments accounted for under the equity method

A. Details of long-term equity investments accounted for under the equity method are set forthbelow:

Note: The percentage of long-term equity investments include the percentage of common sharesheld by the Group.

B. Investment income accounted for under the equity method are set forth below:

C. The financial statements of other investee companies for the years ended December 31, 2012and 2011 were audited by other independent accountants. Long-term equity investments inthese companies amounted to $5,662,006 and $5,527,955 as of December 31, 2012 and 2011,respectively, and the related investment income was $817,618 and $499,987 for the years thenended, respectively.

D. DNW was dissolved based on a resolution approved during the special shareholder’s meetingon January 15, 2010, and went into the process of liquidation. Pursuant to EITF 88-233 of theAccounting Research and Development Foundation, R.O.C., dated December 29, 1999,“Accounting Treatment of Investee Company Accounted for under the Equity Method duringLiquidation”, the subsidiary ceased to be accounted for under the equity method and wasexcluded from the consolidated financial statements. The process of liquidation had beencompleted in the second quarter of 2011.

Investee company % (Note) Book value % (Note) Book valueDelta Electronics (Thailand) Public 20.93 5,662,006$ 20.93 5,232,923$

Co., Ltd. (DET)Amita Technologies, Inc. (Amita) 33.42 249,446 33.49 292,791Digital Projection International Ltd.

(DPI) 32.11 312,564 32.11 247,359Trillion Science, Inc. (Trillion), etc. 128,726 138,711

6,352,742$ 5,911,784$

December 31,2012 2011

Name of investee company 2012 2011DET 817,618$ 537,250$Others 92,804)( 29,700)(

724,814$ 507,550$


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1-

6,59

9,29

1-

-6,

599,

291

66,6

39,6

24$

620,

497

$67

,260

,121

$30

,318

,850

)($

23,4

86)

($36

,917

,785

$

Dec

embe

r31,

2011

~42~

(9) Trademarks

The Company bought registered or under-application trademarks rights such as 、

、VIVITEK、麗訊 and totaling $413,164 from Luxeon International

Holding Ltd. in the fourth quarter of 2012. Trademarks registered in certain countries will not beextended by the Company and are assessed to have finite useful lives. The remaining trademarkswhich have indefinite useful lives shall not be amortized but are tested for impairment annually.

(10) Other intangible assets

For customer relationship acquired due to business combination, please refer to Note 10(10).

Original Cost Accumulated amortization Net book valueIndefinite useful lives

trademarks 386,823$ -$ 386,823$Finite useful lives -

trademarks 26,341 274)( 26,067413,164$ 274)($ 412,890$

December 31, 2012

2012 2011Land use right 1,170,479$ 1,228,031$Customer relationship 2,863,405 3,311,341Others 95,230 21,256

4,129,114 4,560,628Classified to non-current assets held for sale 14,875)( -

4,114,239$ 4,560,628$

December 31,

53 ~43~

(11) Assets leased to others

(12) Idle assets

Accumulated Accumulated NetOriginal cost depreciation impairment book value

Land 229,602$ -$ -$ 229,602$Buildings 2,191,892 597,476)( 548,085)( 1,046,331Computer equipment 16,103 16,103)( - -Testing equipment 310 286)( 24)( -Office equipment 327,934 297,992)( 27,024)( 2,918Other equipment 188,491 26,700)( - 161,791

2,954,332 938,557)( 575,133)( 1,440,642Classified to non-current assetsheld for sale 188,491)( 26,700 - 161,791)(

2,765,841$ 911,857)($ 575,133)($ 1,278,851$

Accumulated Accumulated NetOriginal cost depreciation impairment book value

Land 9,773$ -$ -$ 9,773$Buildings 103,704 35,965)( - 67,739Other equipment 134,826 7,001)( - 127,825

$ 248,303 ($ 42,966) $ - 205,337$

December 31, 2012

December 31, 2011

Accumulated Accumulated NetItem Original cost depreciation impairment book value

Buildings 64,453$ 28,194)($ 36,259)($ -$Machinery and equipment 2,904,662 1,633,334)( 1,000,849)( 270,479Computer equipment 1,813 1,580)( 233)( -Testing equipment 90,364 83,008)( 7,356)( -Transportation equipment 85 49)( 36)( -Office equipment 8,824 6,302)( 2,522)( -

3,070,201 1,752,467)( 1,047,255)( 270,479Classified to non-current

assets for sale 304,419)( 33,940 - 270,479)(2,765,782$ 1,718,527)($ 1,047,255)($ -$

December 31, 2012

~44~

(13) Disposal groups as held for sale and discontinued operationsA. On December 19, 2012, the Board of Directors of DelSolar and Neo Solar Power Corporation

(NSP) resolved to merge through share exchange. Each common share of DelSolar will beconverted into 0.735 share of NSP. DelSolar will be the dissolved company and NSP will bethe surviving company after the consolidation. The effective date is temporarily set on May 31,2013. DelSolar meets the criteria of the subsidiary classified as held for sale due to the mergerthrough share exchange. The assets, liabilities and equity relating to DelSolar classified asdisposal group as held for sale meets the definition of discontinued operations to be presentedin discontinued operations. The disposal group as held for sale originally belonged to energymanagement business.

B. Assets classified to disposal groups as held for sale:

C. Liabilities classified to disposal groups as held for sale:

Accumulated Accumulated NetItem Original cost depreciation impairment book value

Buildings 41,320$ 21,820)($ 19,500)($ -$Machinery and equipment 2,661,346 1,631,652)( 1,029,694)( -Computer equipment 1,918 1,671)( 247)( -Testing equipment 94,152 85,938)( 8,214)( -Transportation equipment 88 51)( 37)( -Office equipment 8,256 5,528)( 2,728)( -

2,807,080$ 1,746,660)($ 1,060,420)($ -$

December 31, 2011

December 31, 2012Cash and cash equivalents 1,946,553$Other current assets 2,227,915Property, plant and equipment, net 6,393,645Other assets 1,507,839

12,075,952$

December 31, 2012Short-term loans 1,853,645$Long-term liabilities - current portion 1,480,597Other current liabilities 1,470,350Long-term loans 1,853,333Other liabilities 179,294

6,837,219$

55 ~45~

D. Details of amounts recognised directly in equity relating to non-current assets held for sale areset forth below:

E. The disclosure of income and cash flows from discontinued operations are as follows:

Note: The Group’s loss from discontinued operations for the year ended December 31, 2011was reclassified based on income or loss from DelSolar’s income statement at the sameperiod and not retroactively adjusted.

F. Details of major assets and liabilities accounts of disposal groups as held for sale are asfollows:a. Cash and cash equivalents

December 31, 2012826,101$

Cumulative translation adjustments 47,593)(778,508$

Capital reserves

2012 2011 (Note)Operating income from discontinued operations

Net operating revenues 4,321,730$ 9,581,970$Operating costs and expenses 6,293,322)( 12,425,386)(Non-operating income 11,266 7,074

1,960,326)( 2,836,342)(Income tax benefit 20,515 295,394

1,939,811)($ 2,540,948)($Cash flows from discontinued operations:

2012 2011Cash flows from operating activities 156,868)($ 2,087,915)($Cash flows from investing activities 946,859)($ 4,140,668)($Cash flows from financing activities 1,361,547$ 2,363,542$



December 31, 2012Cash on hand 69$Checking and demand deposits 490,093Time deposits 1,386,426Cash equivalents-commercial paper 69,965

1,946,553$

~46~

b. Property, plant and equipment

c. Short-term loans

d. Long-term loans

(a) Please refer to Note 4(16)B. for more details. DelSolar had received the written consentfor the unconditional exemption from maintaining liabilities not exceeding 100% oftangible net equity and interest coverage of at least 300% in 2012 by banks onSeptember 26, 2012.

(b) Please refer to Note 6 for collaterals of secured banks loans.

AccumulatedItem Original Cost depreciation Net book value

Buildings 2,324,978$ 429,945)($ 1,895,033$Machinery and equipment 4,759,918 2,420,935)( 2,338,983Molding equipment 590 590)( -Computer equipment 67,589 41,976)( 25,613Testing equipment 212,985 152,352)( 60,633Transportation equipment 2,797 1,592)( 1,205Office equipment 15,739 7,781)( 7,958Construction in progressand prepayments forequipment 2,064,220 - 2,064,220

9,448,816$ 3,055,171)($ 6,393,645$

December 31, 2012

December 31, 2012Unsecured bank loans 1,853,645$Credit lines 4,524,662$Interest rate per annum 1.40%~2.26%

December 31, 2012Secured bank loans 1,706,666$Credit loans 1,627,264Less: Current portion 1,480,597)(

1,853,333$Credit lines 4,871,200$Interest rate per annum 2.04%~2.37%

57 ~47~

(14) Short-term loans

(15) Financial liabilities at fair value through profit or loss

A. The Group recognized net loss of $133,426 and $443,901 for the years ended December 31,2012 and 2011, respectively.

B. The nature of derivative transactions and related information are summarized as follows:

a. The subsidiaries entered into forward exchange contracts to manage exposures to foreignexchange rate fluctuations of import or export sales. However, these transactions did not

2012 2011Unsecured bank loans 6,890,912$ 17,599,492$Classified to liabilities directly associated with

non-current assets held for sale 1,853,645)( -5,037,267$ 17,599,492$

Credit lines 73,821,776$ 76,472,572$Interest rate per annum 0.48%~5% 0.616%~6.888%

December 31,


Financial liabilities held for tradingAdjustment of derivatives 26,286$ 4,257$

December 31,

Financial instruments Contract periodForward exchange contracts:

Sell USD / Buy JPY USD 15,200 2012.10.05~2013.03.14Sell USD / Buy EUR EUR 1,400 2012.11.02~2013.03.14Buy USD / Sell EUR EUR 3,537 2012.10.05~2013.04.29Sell EUR / Buy NTD EUR 80 2012.11.16~2013.01.15Buy NTD / Sell EUR EUR 16 2012.12.27~2013.02.27



Financial instruments Contract periodForward exchange contracts:

Sell USD / Buy JPY USD 11,800 2011.10.05~2012.03.14Sell USD / Buy CZK CZK 33,000 2011.10.04~2012.01.19Sell USD / Buy NTD USD 8,000 2011.11.07~2012.02.15



~48~

meet all the criteria for hedge accounting. Therefore, the subsidiaries did not apply thehedge accounting.

b. The forward exchange contracts of the Company and certain subsidiaries met all thecriteria for hedge accounting and the related information is described in Note 10(9).

(16) Long-term loans

A. As of December 31, 2012, the revolving loans of $16,315,000 can be drawn down during theperiod from June 22, 2012 to November 22, 2015 and are payable before the due date underthe agreement.

B. On February 16, 2009, DelSolar entered into a five-year syndicated credit facility agreementwith 9 financial institutions – Chinatrust Commercial Bank and First Commercial Bank as thelead banks and obtained a credit line in the amount of $4 billion. Under the loan agreement,DelSolar should maintain the following financial ratios during the loan period (based on theaudited semiannual/annual consolidated financial statements):a. Current assets to current liabilities ratio of at least 1:1;b. Liabilities not exceeding 100% of tangible net equity;c. Interest coverage of at least 300%; andd. Net book value of tangible assets of at least $4,000,000.Under the agreement, the above revolving loans can be drawn down within five years afterAugust 14, 2009 and are payable before the due date. DelSolar had received the writtenconsent for the unconditional exemption from maintaining liabilities not exceeding 100% oftangible net equity in 2012 and interest coverage of at least 300% in 2012 and 2011 by bankson September 26, 2012 and September 16, 2011.

C. Please refer to Note 6 for collaterals of secured bank loans.(17) Accrued pension liabilities

A. The Company, Cyntec, DelSolar, and DNIT have a non-contributory and funded definedbenefit plan in accordance with the Labor Standards Law, covering all regular employeesbefore the implementation of the Labor Pension Act on July 1, 2005. The defined benefit

2012 2011Credit loans 18,191,714$ 23,821,055$Secured bank loans 1,706,666 1,899,024Less: Current portion 1,553,530)( 857,832)(

18,344,850 24,862,247Classified to liabilities directly associated with

non-current assets held for sale 1,853,333)( -16,491,517$ 24,862,247$

Credit lines 30,738,649$ 36,614,574$Interest rate per annum 0.46%~2.37% 0.46%~2.06%

December 31,

59 ~49~

plan will continue to cover the employees who choose to remain with the defined benefit plan.Upon retirement, pension payments are calculated based on total years of service and averagesalary of the last six months prior to retirement. Two base units are earned for the first 15years of service and one unit for each additional year thereafter, with a maximum number of45 units. The Company and these subsidiaries contribute 2% of the employees’ monthlysalaries and wages to an independent retirement trust fund with the Bank of Taiwan, thetrustee. For the years ended December 31, 2012 and 2011, the net periodic pension costs ofthe Company, Cyntec, DelSolar and DNIT were $184,360 and $190,252, respectively. Thebalance of the retirement trust fund with the Bank of Taiwan was $696,558 and $676,506 as ofDecember 31, 2012 and 2011, respectively.

B. The reconciliation of the pension plan’s funded status to accrued pension liability of theCompany, and the subsidiaries registered in Taiwan as of December 31, 2012 and 2011, therespective measurement dates, are as follows:a. The reconciliation of the pension plan’s funded status to accrued pension liability of the

Company, and the subsidiaries registered in Taiwan as of December 31, 2012 and 2011,the respective measurement dates, are as follows:

2012 2011Benefit obligation:

Vested benefit obligation 614,822)($ 455,556)($Non-vested benefit obligation 1,859,632)( 1,822,387)(Accumulated benefit obligation 2,474,454)( 2,277,943)(Effect of future salary increments 1,256,326)( 1,207,182)(Projected benefit obligation 3,730,780)( 3,485,125)(

Fair value of plan assets 696,558 676,506Funded status 3,034,222)( 2,808,619)(Unrecognized transition obligation 9,239 22,261Unrecognized net pension loss 1,640,609 1,537,311Accrued pension liability 391,134)( 358,621)(Accrued pension liability (total) 1,775,508)($ 1,607,668)($Accrued pension liability (per books) 1,780,664)( 1,612,606)(Prepaid pension expenses (shown as

non-current assets classified as held for sale) 5,156 4,9381,775,508)($ 1,607,668)($

December 31,

~50~

b. The related assumptions used for the actuarial valuation were as follows:

c. In 2012 and 2011, the details of net periodic pension cost are as follows:

C. The subsidiaries, DIH and DNH, do not maintain an employee retirement plan. However,certain subsidiaries of DIH and DNH, located in Mainland China maintain definedcontribution retirement plans covering all employees. Under the plan, the employees of DIHand DNH subsidiaries contribute to a separate fund an amount based on a certain percentageof the monthly basic salary of the employees for amounts depending on the employee’sposition. As of December 31, 2012 and 2011, the pension reserves of DIH’s and DNH’ssubsidiaries were $955,660 and $990,443, respectively.

D. DEJ and the subsidiaries of DIH and DNH located in the United States have definedcontribution plans in accordance with the local regulations.

E. Effective July 1, 2005, the Company, Cyntec, DelSolar, DNIT, Ayecom, NEM, DelBio, DeltaCapital and Delta Robot (collectively referred herein as the subsidiaries registered in Taiwan)have established a defined contribution pension plan under the Labor Pension Act (the “NewPlan”) for eligible employees holding Republic of China citizenship. The Company and thesubsidiaries registered in Taiwan deposit the pension amount based on 6% of the employees’monthly salaries and wages into each employee’s personal pension account with the Bureau ofLabor Insurance. For the years ended December 31, 2012 and 2011, the pension cost of theCompany and the subsidiaries registered in Taiwan amounted to $270,201 and $255,445,respectively.

2012 2011Discount rate 1.5%~1.75% 1.75%~2.25%Expected return rate on plan assets 1.75% 2.00%Average rate of salary increase 2.00%~3.5% 3.00%~3.5%

December 31,

2012 2011Service cost 57,934 59,694Interest cost 68,084 74,347Expected return on plan assets 13,593)( 13,328)(Amortization of unrecognized transition

obligation 15,127 10,094Unrecognized pension loss 56,808 59,445Net pension cost 184,360$ 190,252$


61 ~51~

(18) Common stockA. In accordance with the Company’s Articles of Incorporation, the total authorized common

stock is 2,700,000,000 shares (including 100,000,000 shares for stock warrants conversion).As of December 31, 2012, the total issued and outstanding common stock was 2,421,178,000shares with par value of $10 (in dollars) per share.

B. On December 20, 2004, the Board of Directors of the Company adopted a resolution thatallowed certain stockholders to issue 16,000,000 units of global depository receipts (GDRs),represented by 80,000,000 shares of common stock (Deposited Shares), with one unit of GDRrepresenting 5 shares of common stock. After obtaining approval from SFB, these GDRswere listed on the Securities Exchange of Luxembourg, with total proceeds ofUS$134,666,000. The issuance of GDRs was represented by outstanding shares, therefore,there is no dilutive effect on the common shares’ equity. The main terms and conditions ofthe GDRs are as follows:a. Voting rights

GDR holders may, pursuant to the Depositary Agreement and the relevant laws andregulations of the R.O.C., exercise the voting rights pertaining to the underlying commonshares represented by the GDRs.

b. Sales and redemption of the underlying common shares represented by the GDRs whenthe holders of the GDRs request the Depositary to redeem the GDRs in accordance withthe relevant R.O.C. regulations and the provisions in the Depositary Agreement, theDepositary may (i) deliver the underlying common shares represented by the GDRs to theGDR holders, or (ii) sell the underlying common shares represented by the GDRs in theR.O.C. stock market on behalf of the GDR holder. The payment of proceeds from suchsale shall be made subject to the relevant R.O.C. laws and regulations and the provisionsin the Depositary Agreement.

c. Distribution of dividends, preemptive rights and other rights and interests of GDR unitsbear the same rights as common shares.

d. After considering the stock dividend distribution year by year, as of December 31, 2012,there were 1,266,000 units outstanding, representing 6,330,000 common shares of theCompany’s common stock.

(19) Capital reserveThe R.O.C. Company Law requires that the capital reserve derived from the issuance of newshares at a premium and endowments received shall be exclusively used to offset againstaccumulated deficit, increase capital or distribute by cash to its original shareholders in proportionto the number of shares being held by each of them. The capital reserve can be used to offsetagainst accumulated deficit only when legal reserve and special reserve are insufficient. Onlycapital reserve from paid-in capital in excess of par value and donated surplus can be used toincrease capital and the total amount shall be limited to 10% of outstanding capital each year.

~52~

(20) Legal reserveThe R.O.C. Company Law requires that the Company shall set aside 10% of its net income aslegal reserve after offsetting against prior years’ losses until the legal reserve equals theCompany’s paid-in capital. Except for covering accumulated deficit or issuing new stocks or cashto shareholders in proportion to their share ownership, the legal reserve shall not be used for anyother purpose. The use of legal reserve for the issuance of stocks or cash to shareholders inproportion to their share ownership is permitted, provided that the balance of the reserve exceeds25% of the Company’s paid-in capital.

(21) Undistributed earningsA. As stipulated in the Company's Articles of Incorporation, the current year's earnings, if any,

shall be distributed in the following order:a. Payment of all taxes and dues.b. Offset against prior years' operating losses, if any.c. Set aside 10% of the remaining amount as legal reserve, unless the accumulated amount of

the legal reserve has reached the total authorized capital of the Company.d. Setting aside or reversing a special reserve according to relevant regulations when

necessary.e. The amount of distributable earnings after deducting items a, b, c and d, plus beginning

undistributed earnings (the earnings), shall be distributed in the following percentageaccording to the resolution approved at the stockholders’ meeting:(a) Directors' remuneration: up to 1% of the earnings.(b) Employees' bonus: at least 3% of the earnings. The Company can issue the employee

stock bonus to qualified employees of subsidiaries. The related regulations should beauthorized by the Company’s Board of Directors or authorized person.

(c) Stockholders' bonus: balance of the earnings after deducting (a) and (b).B. The Company’s dividend policy is summarized below:

As the Company operates in a volatile business environment and is in the stable growth stage,the residual dividend policy is adopted taking into consideration the Company’s financialstructure, operating results and future expansion plans. According to the dividend policyadopted by the Board of Directors, at least 50% of the Company’s earnings shall beappropriated as dividends, and cash dividends shall account for at least 5% of the totaldividends distributed.

C. a. The appropriations of 2011 and 2010 earnings was approved by the shareholders during theirmeeting on June 19, 2012 and June 24, 2011, respectively. Details are summarized below:

63 ~53~

Note A: The shareholders during their meeting had approved to distribute employees’ cashbonuses of $1,536,340 and directors’ and supervisors’ remuneration of $16,700.

Note B: The shareholders during their meeting had approved to distribute employees’ cashbonuses of $2,914,390 and directors’ and supervisors’ remuneration of $16,700.

There was no difference in the amounts of the earnings appropriation as approved by thestockholders with that proposed by the Board of Directors. The information will be postedin the “Market Observation Post System” at the website of the Taiwan Stock ExchangeCorporation.

b. The appropriations of 2012 earnings had been proposed by the Board of Directors on March11, 2013. Details are summarized below:

Note A: The Board of Directors had proposed to distribute employees’ cash bonuses of$2,047,925 and directors’ and supervisors’ remuneration of $30,400.

Note B: The dividend per share is based on the number of outstanding common shares ofthe Company as of February 26, 2013. If the number of outstanding shares of theCompany changes due to exercise of employee stock options and consequentlyleads to a change in the dividend distribution ratio approved during the generalmeeting, the Board of Directors of the Company is authorized to adjust the ratiobased on the number of outstanding shares.

As of March 11, 2013, the abovementioned 2012 earnings appropriation had not beenapproved by the stockholders.

D. The Group’s estimated amounts of employees’ bonus and directors’ and supervisors’remuneration amounted to $2,784,538 and $26,878 for 2012, respectively, and $2,078,722 and

Dividends DividendsAmount per share Amount per share(Note A) (in dollars) (Note B) (in dollars)

Appropriation for legal 1,099,103$ 1,575,421$reserve

(Reversal of) Appropriation 3,167,470)( 4,796,006for special reserve

Cash dividends 8,417,359 3.49448218$ 12,480,065 5.19546489$

2011 2010

DividendsAmount per share(Note A) (in dollars)

1,610,954$1,918,413$

12,843,222$ 5.3$

2012

Appropriation for legal reserveAppropriation for special reserveCash dividends

~54~

$18,464 for 2011, respectively. The basis of estimates is based on a certain percentage of netincome prescribed by the Company’s Articles of Incorporation and resolved by the Board ofDirectors, after taking into account the legal reserve and other factors. The calculation ofshares of stock bonus distributed is based on the closing price of the Company’s common stockat the previous day of the next stockholders’ meeting after taking into account the effects ofex-rights and ex-dividends. While, if the estimated amounts are different from the amountsapproved by the stockholders subsequently, the difference is recognized as gain or loss in thefollowing year. However, if the accrued amounts for employees’ bonus and directors’ andsupervisors’ remuneration are significantly different from the distributed amounts resolved bythe Board of Directors, then the differences shall be adjusted retroactively in the statements ofincome for the current year. The actual distribution of 2011 earnings was as stated in theprevious paragragh. The resolved amounts of the bonus to employees and directors’ andsupervisors’ remuneration were consistent with the resolutions during the shareholders’meeting and the same amount had been charged against earnings for 2011.

E. The Taiwan imputation tax system requires that any undistributed current earnings, on taxbasis, be subject to an additional 10% corporate income tax if the earnings are not distributedin the following year.

F. As of December 31, 2012 and 2011, details of tax credits of the Company are as follows:

G. As of December 31, 2012 and 2011, the undistributed earnings are as follows:

(22) Share-based payment - employee compensation planA. The Company issued 60,000,000 units of employee stock options with a unit of employee

stock option representing one share of common stock, and the total number of shares of newcommon stock to be issued due to the exercise of employee stock options is 60,000,000, asresolved by the Board of Directors on October 29, 2007. The Company obtained approval fromSFB on November 28, 2007.

2012 2011Imputation tax credit account balance 489,796$ 131,759$

2012 (Estimated) 2011 (Actual)Creditable tax ratio 2.21% 7.40%

December 31,

2012 2011Before January 1, 1998 685,952$ 685,952$On and after January 1, 1998

-10% additional tax assessed 6,010,391 1,368,317-10% additional tax unassessed 16,109,542 10,991,031

22,805,885$ 13,045,300$

December 31,

65 ~55~

B. Through a share swap agreement, the Company acquired all the outstanding shares of CyntecCo., Ltd. (Cyntec) in addition to the shares already held by the Company accounted for underthe equity method and thereby assumed the employee stock options of Cyntec. Details aredescribed below:Cyntec issued 10,000,000 units of employee stock options with a unit of employee stock optionrepresenting one share of common stock. The total number of shares of new common stock tobe issued due to the exercise of employee stock option is 10,000,000, as resolved by the Boardof Directors on October 30, 2007. Cyntec obtained approval from SFB on November 21,2007.

C. As of December 31, 2012, the Company’s share-based payment transactions are set forthbelow:

Note A: Quantity granted is calculated based on the share conversion ratio between theCompany and Cyntec.

Note B: Two years’ service vested 40%; three years’ service vested 70%; four years’ servicevested 100%.

D. The exercise price under the stock-based employee compensation plan is based on the closingprice of the Company’s common stock at the grant date and is subject to adjustments due tochanges in the number of common shares and issuance of cash dividends. The vesting periodof the Company’s employee stock option plan is six years. The employees may exercise thestock options in installments after the stock options are granted for two years.

Actualresignation Estimatedrate in the future

Type of Quantity Contract Vesting current resignationarrangement Grant date granted period conditions period rate

First employee stock 2007.12.18 60,000,000 6 years (Note B) 1.03% 0.00%options compensationplan of the Company

Second employee stock 2007.12.3 5,355,070 6 years (Note B) 0.00% 0.00%options compensation (Note A)plan of Cyntec assumedby the Company

" 2007.12.27 254,195 6 years (Note B) 0.00% 0.00%(Note A)

~56~

E. Details of the first employee stock options compensation plan of the Company are set forthbelow:a. Details of the employee stock options are set forth below:

Note: Weighted-average exercise price of options outstanding at beginning of year wasadjusted due to the change in common stock after taking into account stockdividends and employees’ bonus distributed.

b. Details of the employee stock options outstanding are set forth below:

Weighted- Weighted-average average

exercise price exercise priceStock options No. of shares (in dollars) No. of shares (in dollars)

Options outstanding at 31,866,534 73.0$ 39,609,746 76.8$beginning of year

Options granted - - - -Options exercised 15,625,936)( 70.8 6,769,112)( 76.2Options revoked 329,800)( 72.8 974,100)( 74.1Options outstanding at end

of year (Note) 15,910,798 70.1$ 31,866,534 73.0$Options exercisable at end

of year 15,910,798 31,866,534Options authorized but not

granted at end of year - -

For the years ended December 31,2012 2011

Weighted-average Weighted- Weighted-

Range of expected average averageexercise price No. of remaining exercise price No. of exercise price

(in dollars) shares vesting period (in dollars) shares (in dollars)70.1$ 15,910,798 0.96 years 70.1$ 15,910,798 70.1$

December 31, 2012Stock options outstanding Stock options exercisable

67 ~57~

F. Details of the employee stock options compensation plan of Cyntec are set forth below:a. Details of the employee stock options assumed by the Company are set forth below:

The second employee stock options compensation plan

Note: Weighted-average exercise price of options outstanding at beginning of period wasadjusted due to the change in common stock after taking into account stockdividends and employees’ bonus distributed.



(in dollars) shares vesting period (in dollars) shares (in dollars)73.0$ 31,866,534 1.97 years 73.0$ 31,866,534 73.0$



No. of exercise price No. of exercise priceStock options shares (in dollars) shares (in dollars)

Options outstanding at 2,810,326 38.09$ 4,370,977 40.08$beginning of year

Options granted - - - -Assumed through

business combination - - - -Options exercised 2,168,247)( 37.57 1,560,651)( 39.70Options revoked - - - -Options outstanding at

end of year (Note) 642,079 36.59$ 2,810,326 38.09$Options exercisable at

end of year 642,079 2,810,326Options authorized but

not granted at end ofyear - -


~58~

b. Details of the employee stock options outstanding are set forth below:Second employee stock options compensation plan

G. The following sets forth the pro forma net income and earnings per share based on theassumption that the compensation cost is accounted for using the fair value method for thefirst employee stock options compensation plan of the Company which was granted beforethe effectivity of R.O.C. SFAS No. 39, “Accounting for Share-based Payment”:

For the stock options granted before January 1, 2008 with the compensation cost accountedfor using the fair value method, their fair value on the grant date is estimated using theBlack-Scholes option-pricing model. The weighted-average parameters used in the estimationof the fair value and estimated results are as follows:



(in dollars) shares vesting period (in dollars) shares (in dollars)$36.3~$36.6 642,079 0.93 years 36.59$ 642,079 36.59$



(in dollars) shares vesting period (in dollars) shares (in dollars)$37.8~$38.1 2,810,326 1.92 years 38.09$ 2,810,326 38.09$



2012 2011Consolidated net Net income stated in

the16,109,542$ 10,991,031$

income statement of incomePro forma net income 16,109,542 10,872,013

Basic earnings per EPS stated in the 6.68 4.58share (EPS) statement of income(in dollars)

Pro forma EPS 6.68 4.53Diluted EPS EPS stated in the 6.58 4.49(in dollars) statement of income

Pro forma EPS 6.58 4.44


69 ~59~

a. Parameters:

b. Conclusion:

Note: No compensation cost was incurred due to all stock options had been vested.H. Information on estimation of fair value of employee stock options of Cyntec assumed by the

Company using the Black-Scholes option-pricing model on the grant date are as follows:

2012 2011Dividend yield rate 0% 0%Expected price volatility 33.68% 33.68%Risk-free interest rate 2.46% 2.46%Expected vesting period 4.45 years 4.45 yearsWeighted-average fair value per share

(in dollars) 70.1$ 73.0$


2012 2011Weighted-average fair value of stockoptions

31.7991$ 31.7991$per share (in dollars)

Compensation cost accounted for usingthe

(Note) 119,018$fair value method


Expected Weighted-Stock Exercise Expected Expected dividend Risk-free average

Type of Grant price price price vesting yield interest fair valuearrangment date (in dollars)(in dollars) volatility period rate rate (in dollars)

Secondemployeestock optionscompensationplan ofCyntecassumedby theCompany

2007.12.3 100.5$ 41.8$ 40.23% 2.33 years 0.00% 0.853% 60.7591$

〃 2007.12.27 100.5 41.4 40.23% 2.48 years 0.00% 0.877% 61.3189

~60~

I. DelSolar’s share-based payment transactions:a. As of December 31, 2012, DelSolar’s share-based payment transactions are set forth below:

Actual Estimated

Quantity resignation future

Type of granted Contract Vesting rate in the resignation

arrangement Grant date (Shares) period conditions current period rateFirst employeestock optionscompensationplan

2005.6.20 4,600,000 6 years Two years’ servicevested 40%;three years’ servicevested 70%;four years’ servicevested 100%

- -

Second employeestock optionscompensationplan

2007.9.14 1,500,000 6 years Two years’ servicevested 25%;three years’ servicevested 50%;four years’ servicevested 75%;five years’ servicevested 100%

3.47% -

Third employeestock optionscompensationplan

2007.11.20 4,000,000 7 years 〃 14.03% -

Fourth employeestock optionscompensationplan

2009.8.13 2,000,000 7 years 〃 22.87% -

Fifth employeestock optionscompensationplan

2009.10.26 1,470,000 7 years 〃 26.45% -

Sixth employeestock optionscompensationplan

2010.4.22 730,000 7 years 〃 26.57% 7.00%

Seventh employeestock optionscompensationplan

2010.10.18 2,100,000 7 years 〃 30.54% 7.00%

Capital increasein cash reservedfor employees

2012.5.1 1,247,000 - Immediatedlyvested

- -

Issuance of newrestrictedemployee shares(Note A)

2012.10.24 2,700,000 2 years Note B 2.44% 7.00%

71 ~61~

(Note A) The new restricted employee shares issued by DelSolar shall not be transferableduring the vesting period but do not restrict the right to vote and participate in thedividend distribution. Employees who leave the company during the vestingperiod shall return the stock, but the dividends received need not be returned.

(Note B) One year’s service and performance appraisal of excellent vested 50%; Two years’service and performance appraisal of excellent vested 100%.

b. Details of the employee stock options are set forth below:



Options outstanding atbeginning of year

8,191,000 60.77$ 9,426,750 61.33$

Options granted - - - -Options revoked 1,711,000)( 59.71 1,198,500)( 65.85Options exercised - - 37,250)( 30.10Options outstanding at endof year 6,480,000 57.50 8,191,000 60.77

Options exercisable at endof year 4,264,750 61.08 3,026,500 68.24


~62~

c. As of December 31, 2012 and 2011, the range of exercise price of stock options outstandingwas $28.3~$61.7 (in dollars) and $29.6~$85 (in dollars), respectively, and theweighted-average remaining vesting periods were as follows:

d. As the fair value of employee stock options under the fourth and fifth employee stockoptions plans issued by DelSolar from January 1, 2008 through December 31, 2009 cannotbe measured reliably, they are measured at their intrinsic value. According to theGin-Gwen-Tz Letter No. 0960065898 of the former Financial Supervisory Commission,Executive Yuan, R.O.C., dated December 12, 2007, the intrinsic value is referred to as thedifference between fair value and exercise price of shares. The fair value of shares ofDelSolar is measured based on their net asset value before they are listed on the StockExchange. The Gin-Gwen-Tz Letter No. 0960065898 is applicable to the fourth and fifthemployee stock options plans as they were issued prior to January 1, 2010.

e. For the stock options under the sixth and seventh employee stock options plans, capitalincrease in cash reserved for employees and issuance of new restricted employees sharesgranted by the Company after (on) January 1, 2010 with the compensation cost accountedfor using the fair value method, their fair value on the grant date is estimated using theBlack-Scholes option-pricing model in accordance with the Gin-Gwen-Tz Letter No.0990006370 of the former Financial Supervisory Commission, Executive Yuan, R.O.C.,dated March 15, 2010. The weighted-average parameters used in the estimation of the fairvalue are as follows:

2012 2011First employee stock optionscompensation plan - -

Second employee stock optionscompensation plan 0.70 years 1.70 years

Third employee stock optionscompensation plan 1.89 years 2.89 years

Fourth employee stock optionscompensation plan 3.62 years 4.62 years

Fifth employee stock optionscompensation plan 3.82 years 4.82 years

Sixth employee stock optionscompensation plan 4.31 years 5.31 years

Seventh employee stock optionscompensation plan 4.80 years 5.80 years


73 ~63~

J. NEM’s share-based payment transactionsa. As of December 31, 2012, NEM’s share-based payment transactions are set forth below:

Note: Two years’ service vested 50%; three years’ service vested 75%; four years’ servicevested 100%.

Expected Weighted-

Stock Exercise Expected Expected dividend Risk-free average

Type of Grant price price price vesting yield interest fair value

arrangment date (in dollars) (in dollars) volatility period rate rate (in dollars)Sixth 2010.04.22 $ 53.64 $ 53.3 37.18% 5.25 years 0% 1.01% $ 18.77Seventh 2010.10.18 58.88 65.6 32.82% 5.25 years 0% 0.90% 16.01Capitalincrease incash reservedfor employees

2012.05.01 18.99 14.7 53.61% 0.01 years 0% 0.71% 4.29

New restrictedemployeeshares

2012.10.24 11.65 - - 2.00 years - - 11.65

Actual Estimated

resignation rate future

Type of Grant Quantity Contract Vesting in the current resignation

arrangment date granted period conditions period rateFirst employee stockoptionscompensation planof the Company

2009.11.25 572,600 8 years (Note) 44.29% 44.53%

Second employeestock optionscompensation planof the Company

2010.04.30 590,000 8 years (Note) 59.55% 8.27%

Third employeestock optionscompensation planof the Company

2010.12.21 388,000 8 years (Note) 0.00% 14.11%

Fourth employeestock optionscompensation planof the Company

2011.12.21 1,299,400 8 years (Note) 19.75% 15.72%

Fifth employee stockoptionscompensation planof the Company

2012.12.10 847,000 8 years (Note) 0.00% 22.66%

~64~

b. Details of the employee stock options compensation plan of NEM are set forth below:(a) Details of the employee stock options are set forth below:

(b) Details of the employee stock options outstanding are set forth below:

c. The Board of Directors of NEM adopted a resolution to issue 572,600 units of employeestock options on November 25, 2009. As the fair value of shares of NEM cannot bemeasured reliably, they are measured at their intrinsic value. The intrinsic value isreferred to as the difference between fair value and exercise price of shares. The shares’



Options outstanding atbeginning of year

2,372,400 10$ 1,480,600 10$

Options granted 847,000 10 1,299,400 10Options exercised - - - -Options forfeited 614,000)( 10 407,600)( 10Options outstanding at

end of year 2,605,400 10$ 2,372,400 10$Options exercisable at

end of year 422,000 206,000Options authorized but not

granted at end of year 303,000 1,150,000


Weighted- Weighted-average average Weighted-

Range of exercise exercise averageexercise price No. of remaining price No. of exercise price

(in dollars) shares vesting period (in dollars) shares (in dollars)10$ 2,605,400 6.79 years 10$ 422,000 10$

Weighted- Weighted-average average Weighted-

Range of exercise exercise averageexercise price No. of remaining price No. of exercise price

(in dollars) shares vesting period (in dollars) shares (in dollars)10$ 2,372,400 7.14 years 10$ 206,000 10$



75 ~65~

fair value is measured based on their net asset value as per latest financial statements ofNEM, which were audited by independent accountants, when they are unlisted and will bemeasured at their market price after being listed on the Stock Exchange. As the shares’net asset value as at December 31, 2012 and 2011 were both lower than the subscriptionprice, no expense was incurred on share-based payment transactions for those employeestock options.

d. For the NEM’s stock options granted after January 1, 2010 with the compensation costaccounted for using the fair value method, their fair value on the grant date is estimatedusing the Black-Scholes option-pricing model. The weighted-average parameters usedin the estimation of the fair value and estimated results are as follows:

K. Compensation cost incurred on the Group’s equity-settled share-based payment transactions forthe years ended December 31, 2012 and 2011 was $14,658 and $43,111, respectively.

Grant date April 30, 2010 December 21, 2010 December 21, 2011 December 10, 2012Dividend yieldrate

- - - -

Expected pricevolatility

51.68% 48.62% 50.18% 47.48%

Risk-free interestrate

1.30% 1.13% 1.09% 0.99%

Expected vestingperiod

5.38 years 5.38 years 5.38 years 5.38 years

Weighted-averagefair value pershare (in dollars)

$ 10 $ 10 $ 10 $ 10

Weighted-averagefair value of stockoptions per share(in dollars)

$ 1.5746 $ 2.3217 $ 1.2495 $ 0.3621

~66~

(23) Income taxA. The components of deferred income tax assets and liabilities are as follows:

Original Originalamount Tax effect amount Tax effect

Current:Allowance for inventoryobsolescence 902,507$ 164,260$ 1,142,567$ 231,322$

Unrealized exchange gain 35,026)( 5,954)( 96,675)( 18,826)(Loss on long-term purchasecontract 344,225 58,518 490,878 83,449

Others 2,160,334 400,102 1,609,458 245,912Loss carryforwards 8,406 1,429 110,701 18,803Investment tax credits 826,465 497,084

1,444,820 1,057,744Less: Valuation allowance 841,311)( 459,830)(

603,509 597,914Classified to non-current

assets held for sale 13,917)( -Net deferred income tax

assets - current 589,592$ 597,914$Non-current:

Long-term equityinvestments 27,621,599)($ 4,695,638)($ 29,658,186)($ 5,041,856)($

Depreciation differencebetween tax and financialbasis 4,224,008 1,010,768 3,556,610 805,473

Impairment loss 3,131,844 595,208 1,108,303 258,217Pension liability 2,332,478 437,127 2,141,384 367,293Others 10,137,724)( 668,354)( 6,414,236)( 513,537)(Loss carryforwards 12,082,230 2,063,275 3,411,208 571,296Investment tax credits 11,551 964,267

1,246,063)( 2,588,847)(Less: Valuation allowance 2,418,175)( 1,278,458)(

3,664,238)( 3,867,305)(Classified to non-current

assets held for sale 483,778)( -Net deferred income tax

liabilities - non-current 4,148,016)($ 3,867,305)($

December 31, 2012 December 31, 2011

77 ~67~

B. As of December 31, 2012 and 2011, income tax expense and income tax payable arereconciled as follows:

C. As of December 31, 2012, losses available to be carried forward by the Company andsubsidiaries and investment tax credits of the companies registered in Taiwan in accordancewith the “Statute for Upgarding Industries” were as follows:

D. Under the PRC tax regulations, the corporate income tax of DDG shall be levied at thepreferential rate of 15 percent as it was classified as high-tech enterprise after governmentreview. Furthermore, because its additional investment in 2007 is included in the incentiveitems specified in the “Catalogue for the Guidance of Foreign Investment Industries”, the taxpayable for the income from the additional investment can be calculated separately. Thus, for

2012 2011Income tax expense 3,328,523$ 2,825,962$(Including income tax benefit of $20,515

and $295,394 from discontinuedoperations)

Effect of deferred income tax 158,210)( 447,289Difference between tax credits approvedforforeign income and tax credits usedactrually

20,563)( 29,729)(Over provision of income tax in prior

years, net 130,806 9,807Prepaid income tax 1,160,714)( 1,461,430)(Income tax payable of prior period 258,306 190,823Tax effect due to changes in consolidated

subsidiaries - 26,321Others 83,990)( 58,502Income tax payable - net 2,294,158$ 2,067,545$Income tax refundable 1,687)($ 25,374)($Shown as non-current assets classified as

held for sale 1,019)( -Income tax payable 2,296,864 2,092,919

2,294,158$ 2,067,545$


Source Unused credits Year of expirationLoss carryforwards 2,064,704$ Between 2014 and 2022R&D expenditures 834,032$ 2013Training expenditures 3,308 2013Expenditures for procurement of

machinery and equipment 676 2013838,016$

~68~

this part, DDG is exempt from corporate income tax for the first and second profit-makingyears and is subject to a 50% reduction of corporate income tax from the third through fifthprofit-making years. Year 2012 is the last year wherein DDG can apply the 50% reduction ofcorporate income tax, with a tax rate of 12.5%.

E. Under the PRC tax regulations, DWH is exempt from corporate income tax for the first andsecond years since 2008 and is subject to a 50% reduction of corporate income tax from thethird through fifth years since 2008. Year 2012 is the last year wherein DWH can apply the50% reduction of corporate income tax.

F. As of December 31, 2012, the status of the Group’s assessed and approved income tax returnsare as follows:

(24) Earnings per share

Years Assessed by Tax AuthorityThe Company 2010Cyntec, DelSolar, AMT, Delta CapitalDelBio, DNIT, NEM and Ayecom 2010

Delta Robot and DSGL Not assessed yet

Weighted-average

outstandingIncome common Incomebefore Net shares before

income tax income (in thousands) income tax Net incomeBasic EPS

Net income fromcontinuing operations 21,398,391$ 18,049,353$ 2,410,764 8.88$ 7.49$

Dilutive effect ofcommon stockequivalents:Employee stock options - - 6,573Employee bonus (Note) - - 31,024

Diluted EPSNet income from

continuing operations 21,398,391$ 18,049,353$ 2,448,361 8.74$ 7.37$

For the year ended December 31, 2012

Earnings perAmount share (in dollars)

79 ~69~

Weighted-average

outstandingLoss common Loss

before shares beforeincome tax Net loss (in thousands) income tax Net loss

Basic LPSNet loss from

discontinuedoperations 1,960,326)($ 1,939,811)($ 2,410,764 0.82)($ 0.81)($

Diluted LPSNet loss from

discontinuedoperations 1,960,326)($ 1,939,811)($ 2,448,361 0.80)($ 0.79)($

Amount share (in dollars)


Loss per

Weighted-average

outstandingIncome common Incomebefore Net shares before

income tax income (in thousands) income tax Net incomeBasic EPS

Net income fromcontinuing operations 16,447,706$ 13,326,350$ 2,401,627 6.85$ 5.55$

Dilutive effect ofstock equivalents:Employee stock options - - 9,906Employee bonus (Note) - - 37,508

Diluted EPSNet income from

continuing operations 16,447,706$ 13,326,350$ 2,449,041 6.72$ 5.44$Basic EPS

Net income fromdiscontinued operations 2,836,342)($ 2,540,948)($ 2,401,627 1.19)($ 1.06)($

Extraordinary gain 205,629$ 205,629$ 2,401,627 0.09$ 0.09$Diluted EPS

Net income fromdiscontinued operations 2,836,342)($ 2,540,948)($ 2,449,041 1.16)($ 1.03)($

Extraordinary gain 205,629$ 205,629$ 2,449,041 0.08$ 0.08$


Earnings perAmount share (in dollars)

~70~

(Note) Effective January 1, 2008, as employees’ bonus could be distributed in the form of stock,the diluted EPS computation shall include those estimated shares that would increase fromemployees’ stock bonus issuance in the calculation of the weighted-average number ofcommon shares outstanding during the reporting year, taking into account the dilutiveeffect of stock bonus on potential common shares; whereas, basic EPS shall be calculatedbased on the weighted-average number of common shares outstanding during the reportingyear including the shares of employees’ stock bonus for the appropriation of prior yearearnings, which have already been resolved at the stockholders’ meeting held in thereporting year. Since capitalization of employees’ bonus no longer belongs to distributionof stock dividends, the calculation of basic EPS and diluted EPS for all periods presentedshall not be adjusted retroactively.

81

~71~

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~72~

5. RELATED PARTY TRANSACTIONS(1) Names and relationship of related parties

Names of related parties Relationship with the CompanyDelta Electronics (Thailand) Public Co., Ltd. Investee company accounted for under the equity

(DET) methodAmita Technologies, Inc. (Amita) 〞

Digital Projection International Ltd. (DPI) 〞

Crystalrich (HongKong) Co., Ltd. 〞

(Crystalrich-HK)Trillion Science, Inc. (Trillion) 〞

Delta Products Corporation (DPC) Related party in substanceDelta Greentech (China) Co., Ltd. (DGC) Related party in substance (before October 3, 2011)

A subsidiary held by DIH, Ace and Drake-HK(after Octorber 3, 2011)

Digital Projection Ltd. (DP) A subsidiary of DPICrystalrich (Guangzhou) Co., Ltd. A subsidiary of Crystalrich-HKDET International Holding Ltd. A subsidiary of DET

(DET Holding)Delta Energy Systems (Switzerland) AG. 〞

(DES Switzerland)Delta Green Industrial (Thailand) Co., Ltd. 〞

Delta Energy Systems (Singapore) Pte. Ltd. 〞

(DES SG)Delta Energy Systems (Australia) Pty. Ltd. A subsidiary of DES SGDelta Electronics Europe Ltd. (DEU) A subsidiary of DET HoldingDelta Energy Systems (Germany) Gmbh 〞

(DES Germany)Delta Energy Systems (India) PVT Ltd. 〞

(DES India)DET Logistics (USA) Corporation 〞

Delta Electronics (Slovakia) s.r.o. (DESK) 〞

DET Video Technology Limited 〞

Delta Energy System (Arizona), Inc. 〞

DET SGP Pte. Ltd. 〞

Delta India Electronics PVT Ltd. (Delta India) 〞

Delta Power Solutions India PVT Ltd. 〞

(DPS India)

83 ~73~

(2) Significant transactions and balances with related partiesA. Sales

The sales terms, including prices and collections, were negotiated based on cost, market,competitors and other factors.

Names of related parties Relationship with the CompanyDelta Greentech (USA) Corporation (DGA) A subsidiary of DET HoldingDelta Greentech Electronics Industry LLC 〞

Delta Greentech (Brasil) S.A. (DGB) 〞

Delta Energy Systems (Finland) Oy A subsidiary of DES SwitzerlandDelta Energy Systems (Italy) s.r.l (DES Italy) 〞

Delta Energy Systems (Spain) SL. 〞

Delta Energy Systems (Czech Republic) spol 〞

Delta Energy Systems (France) SA. 〞

Delta Energy Systems (Poland) Sp. Zo. o. 〞

Delta Energy Systems LLC (Russia) 〞

Delta Energy Systems (Sweden) AB. 〞

Delta Green (Tianjin) Industries Co., Ltd. Indirectly held investee company accounted for(DGT) under equity method by DET (before August 1,

2011)A subsidiary of DHK (after August 1, 2011)

2012 2011DGA 1,080,040$ 87,167$DPC 809,087 659,672DES Switzerland 635,796 338,086DP 529,732 590,704Delta India 469,244 427,870DES Italy 390,150 273,848DGB 403,419 341,613DET 234,417 170,727DESK 232,555 13,920DPS India 112,590 145,812DES Germany 95,212 237,295DGC - 5,886,177DGT - 164,422Others 34,000 76,826

5,026,242 9,414,139Less: Sales of discontinued operations 454,298)( 283,145)(

4,571,944$ 9,130,994$


~74~

B. Purchases

The purchase terms, including prices and payments, were negotiated based on cost, market,competitors and other factors.

C. Accounts receivable

D. Accounts payable

E. Property transactionsIn December 2011, DHK purchased 50% stock ownership of DGT from DET SGP Pte. Ltd.amounting to $467,803. As of December 31, 2012, such amount had been fully paid. TheCompany has eliminated the disposal gain of $81,322 from this sidestream intercompanytransaction in proportion to the product of its equivalent stock ownership in one investeecompany multiplied by its equivalent stock ownership in the other investee company.

2012 2011DET 513,737$ 446,298$DGT - 478,722Others 109,404 51,620

623,141 976,640Less: Purchases of discontinued operations - 22,446)(

623,141$ 954,194$


2012 2011DGA 309,803$ 10,134$DPC 276,868 133,044DES Switzerland 150,802 108,756DP 133,523 107,396DGB 118,074 107,096DES Italy 111,225 91,572Delta India 84,422 129,738Others 160,827 128,720

1,345,544 816,456Classified to non-current assets held for sale 113,667)( -

1,231,877$ 816,456$

December 31,

2012 2011DET 135,803$ 85,285$Others 46,664 33,089

182,467$ 118,374$

December 31,

85~75~

F. Remuneration information of key management (including directors, supervisors, generalmanager and vice general managers)

Note A: Including wages, allowance, retirement pension and compensation.Note B: Including all kinds of incentives.Note C: Including traveling allowance, payment for special disbursement, cars and dorms

provided by the Group.Note D: Including directors’ and supervisors’ remuneration and employees’ bonus.Note E: For related information, please refer to Annual Report.

6. DETAILS OF PLEDGED ASSETSAs of December 31, 2012 and 2011, the details of pledged assets are as follows:

7. COMMITMENTS AND CONTINGENT LIABILITIESThe Group’s significant commitments as of December 31, 2012 were as follows:(1) Future lease payments purchase commitment

A. As of December 31, 2012, the future lease payments and the net present value discounted at1.37%, one-year time deposit interest rate given by the Chunghwa Post Co., Ltd. are as follows:

2012 2011Salaries (Note A) 54,792$ 52,789$Bonuses (Note B) 67,432 11,415Service fees (Note C) 1,645 2,832Distribution of earnings (Note D) 229,960 207,137

353,829$ 274,173$

Assets pledged 2012 2011 Purpose of pledgeBuildings 1,414,526$ 1,716,158$ Long-term loansMachinery and equipment 342,728$ 21,496$ 〞

Testing equipment 3,645$ -$ 〞

Construction in progress and 1,432,342$ 1,137,339$ 〞

prepayments for equipmentDeferred expenses 4,193$ 6,553$ 〞

Demand deposits and time deposits 3,862$ 100,446$ Collateral for(shown as other financial assets - customs dutiescurrent and non-current)

Cash, demand deposits and time 225 20,000 Collateral fordeposits (shown as other financial disposition andassets - current) seizure

Time deposit (shown as otherassets - current) 39,849 24,163 Performance bonds

43,936$ 144,609$

December 31,

~76~

B. The Company entered into contracts for software procurement and the total future payments forthe acquisition of software amounted to approximately $217,594.

C. The Group entered into contracts for the construction of new factories and buildings, and thetotal future payments for the acquisition of equipment amounted to approximately $1,910,736.

(2) Research engagement contract and technical cooperation agreementA. In October 2007, the Company entered into an agreement with the Institute of Nuclear Energy

Research, Atomic Energy Council, Executive Yuan, R.O.C. for technology authorization ofConcentrating Photovoltaic Modules. The contract is valid through October 2017. In addition tothe authorization fee of $5,000, the Company commits to pay royalties based on a certainpercentage of total sales from the day the authorized products are sold and the maximum amountof the royalty is $100,000. As of December 31, 2012, the Company has paid the authorizationfee totaling $5,000 and royalty fee totaling $621 to the Institute of Nuclear Energy Research.Further, in January, 2010, the Company entered into an agreement with the Institute of NuclearEnergy Research for the temporary termination of the above agreement for two years wherebythe Company cannot use the technology authorization during such period.

B. The Company signed a contract with the Industrial Technology Research Institute for theresearch engagement of LED Projective Array Auto Stereoscopic Display. The contract willexpire in November, 2015. As of December 31, 2012, the Company was committed to futureresearch commission payments under the contract totaling $23,625.

C. The Company entered into an agreement with the Industrial Technology Research Institute forpreliminary technology authorization of open cloud computing system. As of December 31,2012, the Company was committed to future authorization fee under the agreement totaling$6,300.

D. The Company signed an agreement with the National Central University to build a Union R&DCenter jointly. The agreement started in 2011 and will expire in 2020. Under the agreement,both parties agreed to provide $10,000 each per year for the first three years of the agreementfor the establishment of the Union R&D Center. The fund will be managed in a separate accountfor this special use only. If the cooperative performance is assessed to be satisfactory after thecompletion of the three-year execution, the two parties will continue the next three-year plan,

Year Amount2013 144,973$2014 50,5092015 36,9142016 22,2112017 11,1782018~2022 (the net present value is $20,337) 22,6722023 (the net present value is $3,904) 4,534

292,991$

87 ~77~

and confer on issues including their investment proportions. As of December 31, 2012, thefuture payments required of the Company under the above agreement was $10,000.

E. The Company signed an industrial and academic cooperation agreement with the NationalTaiwan University, National Tsing Hua University and National Chiao Tung University. Theagreement started on June 20, 2011 and will expire on June 20, 2014. Under the agreement, theCompany agreed to contribute $32,000 maximum per year to the fund of “Cloud Computing andBusiness Application Program”. As of December 31, 2012, the future payments required ofthe Company under the above agreement was $62,459.

F. DelSolar signed a solar cell joint development agreement with IBM on September 25, 2010. Theagreement started on September 25, 2010 and will expire on September 24, 2013. This technicalcooperation aims at commercial mass production of chemical-compound thin-film solar cellsand gaining technical patent jointly. DelSolar should bear certain amount of developmentexpenses in a period as specified by the agreement. As of December 31, 2012, it had paidUS$6.5 million in advance. DelSolar had terminated this agreement on February 1, 2013 dueto the adjustment of operation plan.

(3) DelSolar’s long-term purchase contractsA. DelSolar signed long-term purchase contracts with 6 materials suppliers with contract periods

from December 2006 to December 2018. According to the contracts, DelSolar agreed to paythose suppliers certain amounts in installments, and the suppliers shall provide DelSolar withmaterials as DelSolar makes prepayments for purchases. Such prepayments may be offsetagainst the relevant purchase amounts or be returned. As a result of the imbalance betweensupply and demand in the solar energy industry, the solar cell trade is making silicon wafer unitprice modification arrangements with silicon wafer suppliers. As of December 31, 2012,DelSolar had signed memorandums of understanding (MOU) with 4 suppliers, specifying unitprice modification mechanisms, and had recognized accrued liabilities for loss on long-termpurchase contructs totaling $344,225 for the above events based on the accounting conservatismprinciple.

B. A reconciliation arrangement was contracted by DelSolar and its material supplier – SwissWafers AG, one of the 6 materials suppliers stated in the first paragraph, due to Swiss WafersAG’s default on its delivery commitment under the silicon wafer supply contract. Afternegotiations, Swiss Wafers AG still could not fulfill the commitment. On March 18, 2010,DelSolar filed a lawsuit against Swiss Wafers AG to protect its creditor’s rights, which is beingtried under the Betreibungsamt Weinfelden Bahnhofstrasse 22 8570 Weinfelden Switzerland.On August 8, 2011, DelSolar had signed an MOU agreeing to deliver materials according tomarket price to offset prepayments. As the result of negotiations with Swiss Wafers AG wasnot as expected, DelSolar had requested commercial arbitration with the ICC Court ofArbitration on March 9, 2012. Under the contract, the maximum loss to DelSolar is the totalbalance of prepayments accrued as at December 31, 2012 amounting to US$3,240 thousand,

~78~

which might be uncollectible from Swiss Wafers AG. As of the financial reporting date, the finaljudgment on this case is still pending.

C. DelSolar agreed on the monthly volume of materials purchases with certain suppliers stated inthe first paragraph. Due to price impact of market supply and demand, DelSolar negotiated forthe amount and quantity of purchase obligations as specified on the contract. Under the contract,the maximum loss to DelSolar is the total balance of prepayment accrued as at December 31,2012 amounting to EUR 3,342 thousand, which might be uncollectible. As of the financialreporting date, the negotiation is in progress and the possible loss cannot be reasonablyestimated.

D. The machinery and equipment which DelSolar purchased from a certain supplier was below thecriteria for acceptance. After negotiation and correction several times, those machinery andequipment still cannot reach the criteria for acceptance. DelSolar had requested commercialarbitration with the Chinese Arbitration Association in July 2012. As of the financial reportingdate, the final judgement on this case is still pending and the possible financial effect cannot bereasonably estimated.

8. MAJOR CATASTROPHENone.

9. SUBSEQUENT EVENTS(1) On Feburary 6, 2013, Delsolar’s extraordinary shareholders' meeting approved the merger with

Neo Solar Power Corporation (NSP). Each common share of DelSolar will be converted into0.735 share of NSP. DelSolar will be the dissolved company and NSP will be the survivingcompany after the consolidation.

(2) On January 17, 2013, DelBio established DelBio (Wujiang) Co., Ltd. (DelBio-WJ). DelBiofunded the establishment of DelBio-WJ with USD 900 thousand on February 19, 2013.

(3) On February 25, 2013, the board of directors of DelBio resolved to conduct capital increase incash. The amount of capital increase will depend on the progress of the establishment ofDelBio-WJ up to a maximum amount of USD 4,050 thousand.

(4) On February 6, 2013, the board of directors of Delta Capital resolved to conduct capital increasein cash of 25,000,000 shares with $10 per share. The funds for the capital increase had beencollected on February 21, 2013 but the registration had not been completed as of the report date.

(5) On February 6, 2013, Delta Capital entered into an agreement with Green Seal Holding Limitedfor the purchase of convertible bonds through private placement amounting to USD 3 millionbefore March 1, 2013. Delta Capital had remitted the payment on February 27, 2013.

(6) On January 8, 2013, DPEC signed a contract with Nanjing Tunjing Cultural Development andCommunication Ltd. for the purchase of commercial office building in Nanjing at approximatelyRMB 73,498,000. On January 8, 2013, DPEC had paid the acquisition price of RMB 15,000,000under the contract.

89

~79~

(7) DIH signed a share purchase agreement with Luxeon International Holding Limited (Luxeon) forthe purchase of 100% ownership of Vivitek Corporation from Luxeon for USD 1,500 thousand.DIH had remitted the payment on January 3, 2013.

10. OTHERS(1) Financial statement presentation

Certain accounts in the 2011 consolidated financial statements were reclassified to conform with the2012 consolidated financial statement presentation.

~80~

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91 ~81~

The methods and assumptions used to estimate the fair values (including non-current disposal groupclassified as held for sale) of the above financial instruments are summarized below:A. Financial assets and liabilities with fair values equal to book values

a. For short-term instruments, the fair values were determined based on their carrying valuesbecause of the short maturities of the instruments. This method was applied to cash and cashequivalents, notes and accounts receivable (including related parties), other receivables(excluding income tax refundable), other financial assets - current, short-term loans, accountspayable (including related parties), accrued expenses, other payables and other currentliabilities.

b. The fair value of cash surrender value of life insurance is based on the book value at thebalance sheet date.

c. The fair values of other financial assets - non-current, refundable deposits and guaranteedeposits received are based on book values, which approximate present value.

d. The fair value of long-term loans is based on book value, which approximates present value.B. The fair value of listed stocks which were recognized as financial assets at fair value through

profit or loss is based on the closing price in open market at the balance sheet date. The fairvalue of private placement of convertible bonds, which were invested before the adoption ofEITF 99-256 of the Accounting Research and Development Foundation, R.O.C., dated October8, 2010, “Accounting for private placement of convertible bonds” is measured at cost; while thefair value of those invested after October 8, 2010 is measured based on Binomial Stock OptionsPricing Model.

C. The fair values of available-for-sale financial assets are based on the quotations in the activemarket, which are the latest quoted closing prices at the balance sheet date.

D. The fair values of derivative financial instruments which include unrealized gains or losses onunsettled contracts were determined based on the amounts to be received or paid assuming thatthe contracts were settled as of the reporting date.

(3) Information on available-for-sale financial assetsThe Group recognized the adjustment in equity from available-for-sale financial assets amountingto $158,449 and ($656,934), and the amount removed from equity and recognized in profit or losswas ($247,788) and $107,718 for the years ended December 31, 2012 and 2011, respectively.

(4) Information on interest rate risk positionsAs of December 31, 2012 and 2011, the Group’s (including non-current disposal group classified asheld for sale) financial assets with fair value risk due to the change of interest amounted to$9,360,232 and $26,532,443, respectively; the financial liabilities with fair value risk due to thechange of interest rate amounted to $116,159 and $5,609,862, respectively; the financial assets withcash flow risk due to the change of interest rate amounted to $16,869,199 and $10,675,664,respectively; and the financial liabilities with cash flow risk due to the change of interest amountedto $26,673,133 and $37,885,208, respectively.

~82~

(5) Procedure of financial risk control and hedgeThe main objective of financial risk control and hedge strategy is to reduce the loss of assets orliabilities (including forecast transactions) resulting from the exchange rate and interest ratefluctuations. The Group achieves financial hedge by entering into derivatives and all activities ofhedge follow the principles listed below to achieve the objective of risk control:A. Nature hedgeB. Does not erode the profit of main businessC. Does not enter into financial instruments besides the transaction currencyD. Should execute stop-loss pointE. Should execute the operating processIn monitoring control, besides the regular audit performed by the internal auditor, the Group’s ChiefFinancial Officer should monitor and manage derivative transactions. Except for evaluating theposition twice a month, the authorized persons should monitor financial instrument transactions andthe related profit or loss resulting from the transactions at any time. If any unusual event occurred,necessary actions should be taken and reported to the Board of Directors immediately. In addition,the performance of derivative transactions will be evaluated periodically to determine if thesetransactions are in compliance with the operating strategy and the risk of these transactions is withinthe tolerable range of the Group. The Group has established the procedures for derivativetransactions.

(6) Information of major financial riskA. Certain transactions of the Group involve non-functional currency which are exposed to

exchange rate fluctuation. The information on foreign currency denominated monetary assets andliabilities which are significantly affected by exchange rate fluctuation is as follows:

Foreign Foreign(Foreign Currency: Currency Amount Exchange Currency Amount ExchangeFunctional Currency) (In thousands) Rate (In thousands) RateFinancial assets

Monetary itemsUSD:NTD 273,469 29.0400 231,700 30.275USD:RMB 177,354 6.2855 15,640 6.3009RMB:USD 784,564 0.1591 1,159,556 0.159


93 ~83~

B. Investments in equity financial instruments

a. Market riskThe investments in equity financial instruments owned by the Group are exposed to pricerisk.

b. Credit riskThe Group assessed the credit condition of counterparties and default is not expected;therefore, the possibility of credit risk is low.

c. Liquidity risk(a) The Group’s investments in equity financial instruments which have active markets are

expected to be sold easily and quickly in the market at the price close to their fair value.(b) The Group’s investments in equity financial instruments without active markets are

expected to have liquidity risk.d. Cash flow risk due to changes in interest rate

The Group’s investments in equity financial instruments are non-interest rate instruments;therefore, there is no cash flow risk related to changes in interest rate.

Foreign ForeignCurrency Amount Exchange Currency Amount Exchange

(In thousands) Rate (In thousands) RateLong-term equityinvestments accountedfor under the equitymethod

THB:USD 6,143,510 0.0328 4,166,653 0.0319THB:NTD 4,737,280 0.9535 3,952,955 0.9647

Financial liabilitiesMonetary itemsUSD:NTD 24,247 29.0400 92,484 30.275USD:RMB 454,222 6.2855 509,934 6.3009RMB:USD 852,898 0.1591 763,939 0.159


Items 2012 2011Financial assets at fair value through profit or

loss - listed and OTC stocks 7,538$ 1,181$Available-for-sale financial assets 2,953,289 649,872Financial assets carried at cost 1,665,433 4,243,408

December 31,

~84~

C. Other financial instrument investments

a. Market riskThe private placement of convertible bonds that the Group invested in have no quoted pricein active market; hence, they are not affected by the changes in market price. Therefore, nosignificant market risk would arise.

b. Credit riskThe Company expects that the counterparty of the private placement of convertible bondsthat it invested in is not likely to default; therefore, the credit risk is extremely low.

c. Liquidity riskThe Group’s working capital is sufficient to support the capital demand of the Group;therefore, the Group expects no significant liquidity risk.

d. Cash flow risk due to changes in interest rateInterest on the private placement of convertible bonds that the Group invested in accrues atfixed interest rate; therefore, there is no cash flow risk arising from interest ratefluctuations.

D. Receivables

Note: Including non-current disposal group classified as held for sale.a. Market risk

The Group’s receivables are all due within one year, therefore, the Group expects nosignificant market risk.

b. Credit riskThe Group’s receivables are all approved through rigorous credit review procedures andsome of which have to take out an insurance policy or provide necessary collaterals;therefore, the Group expects no significant credit risk.

Items 2012 2011Financial assets at fair value through profit or

loss - private placement of convertible bonds 967,513$ 1,820,525$

December 31,

Items (Note) 2012 2011Notes receivable, net 1,320,748$ 1,330,220$Accounts receivable

(including related parties), net 36,441,916 35,525,143Other receivables 717,525 2,082,657

December 31,

95 ~85~

c. Liquidity riskThe Group’s receivables are all due within one year and their working capital is sufficient tosupport its capital requirements; therefore, the Group expects no significant liquidity risk.

d. Cash flow risk due to changes in interest rateThe Group’s receivables are all due within one year; therefore, there is no significant cashflow risk due to changes in interest rate.

E. Loans

Note: Including non-current disposal group classified as held for sale.a. Market risk

The loans of the Group have no significant market risk.b. Credit risk

None.c. Liquidity risk

The expected future cash flow is sufficient to support the capital requirements of the Group;therefore, the Group expects no significant liquidity risk.

d. Cash flow risk due to changes in interest rateThe loans of the Group are issued at floating interest rate, accordingly, the future cash flowof which will fluctuate with the yield rate of these debt instruments. However, due to theshort duration of the short-term loans, there is no significant cash flow risk due to changesin interest rate.

(7) Information on derivative transactionsThe balance of the Group’s derivative transactions as of December 31, 2012 and 2011 are shown inNotes 4(2), (15) and 10(9). The related risk information is as follows:A. Market risk

The Group entered into certain derivative contracts in order to hedge risk. Accordingly, nomaterial market risk is expected.

B. Credit riskThe banks, which the Group deals with, all have good credit standing and the Group deals withseveral banks to disperse the credit risk; therefore, the possibility that the banks will not complywith the terms of the contracts is low.

C. Liquidity riskThe Group has sufficient working capital; therefore no material liquidity risk is expected.

Items (Note) 2012 2011Short-term loans 6,890,912$ 17,599,492$Long-term loans (including current portion) 19,898,380 25,720,079

December 31,

~86~

D. Cash flow risk due to changes in interest rateThe Group did not enter into any derivative contract that is interest rate related; therefore, nomaterial cash flow risk due to changes in interest rate is expected.

(8) Off-balance sheet financial instruments with credit riskNone.

(9) Fair value hedge and cash flow hedgeA. Fair value hedge

The foreign currency demand for the subsidiaries is exposed to the risk resulting from fair valuechanges due to foreign exchange rate changes. The subsidiaries entered into foreign currencyforward contracts which meet all criteria for hedge accounting. The related information is asfollows:

B. Cash flow hedgeIn order to prevent the risk resulting from future cash flow fluctuation due to foreign exchangerate fluctuations, the Group entered into foreign currency forward contracts which meet allcriteria for hedge accounting. The related information is as follows:

Financial instrumentwas designated as Fair value as of Fair value as of

Hedge item hedging instrument December 31, 2012 December 31, 2011Receivables in foreign Forward exchange

currencies contracts $ - ($ 4,088)Payables in foreign Forward exchange

currencies contracts ($ 2,295) $ 2,620

Designated for hedging instrument

Period of gain(loss) anticipated

Financial instrument Period of to be recognizedwas designated as Fair value as of anticipated in income

Hedge item hedging instrument December 31, 2012 cash flow statementReceivables

in foreigncurrencies

Forward exchangecontracts

$ 13,695 2013.01.04~2013.06.04

2013.01.04~2013.06.04

Payablesin foreigncurrencies


11,456 2013.01.04~2013.11.06

2013.01.04~2013.11.06


97 ~87~

(10) Business mergers and acquisitionsA. The Group conducted the following business mergers and acquisitions and stock ownership

adjustments in 2011:a. The Company conducted simple merger with PreOptix originally owned by the Company

with 94.89% ownership, on March 1, 2011, and paid $17,875 to the minority stockholdersof PreOptix for the merger. PreOptix is the dissolved company.

b. The Company’s subsidiary - DHK acquired 100% stock ownership in DGT by cash totaling$938,774 (US$30,904,000) on August 1, 2011 and December 1, 2011.

c. The Company’s sibsidiary - DIH acquired 100% stock ownership in Ace by cash in theamount of $416,219 (US$13,655,000) on September 1, 2011 and 100% stock ownership inDrake by cash in the amount of $5,210,822 (US$172,116,000) on October 3, 2011. Afterthis transaction, the Company’s indirectly owned stock ownership in DGC through Ace andDrake were 3.811% and 48.51%, respectively. Including the original 10.38% stockownership held by the Company, the Company’s consolidated stock ownership in DGC was62.701%.

B. The business activities of each subsidiary were as follows:a. PreOptix: manufacturing and sales of lenses and optical engines for projectors.b. DGT: please refer to Note 11(3)A.c. DGC: please refer to Note 11(3)A.

C. In accordance with paragraph 26 of R.O.C. SFAS No. 25, “Accounting for BusinessCombination - Purchase Method”, publicly traded companies are required to providesupplemental information on the performance of its operations on a pro forma basis. Theassumptions made by each direct subsidiary or indirect subsidiary for their pro formaconsolidated statements of income for the year ended December 31, 2011 are as follows:a. PreOptix was originally the consolidated entity of the Company. The pro forma

information is prepared under the assumption that PreOptix had been dissolved on January1, 2011. The income (loss) of PreOptix had been included in the consolidated statement ofincome.

Period of gain(loss) anticipated

Financial instrument Period of to be recognizedwas designated as Fair value as of anticipated in income

Hedge item hedging instrument December 31, 2011 cash flow statementReceivables

in foreigncurrencies


$ 46,524 2012.01.05~2012.12.06

2012.01.05~2012.12.06

Payablesin foreigncurrencies


23,182 2012.01.05~2012.12.06

2012.01.05~2012.12.06


~88~

b. Effective August 1, 2011, the operating results of DGT was included in the consolidatedstatements of income of DHK, and pro forma supplementary information was preparedunder the assumption that DHK and the Company had acquired 100% and 94% stockownership in DGT, respectively since January 1, 2011.

c. Effective October 3, 2011, the operating results of DGC was included in the consolidatedstatements of income of DIH, and pro forma supplementary information was preparedunder the assumption that DIH and the Company had acquired 62.701% and 94.00% stockownership in DGC, respectively since January 1, 2011.Pro forma supplementary information is as follows:

99 ~89~

Operating revenuesNet salesService incomeNet operating revenues

Operating costsCost of goods soldService costsNet operating costs

Gross profitOperating expensesOperating incomeNon-operating income and gainsNon-operating expenses and lossesIncome from continuing operations before income taxIncome tax expenseNet income from continuing operationsLoss from discontinued operationsConsolidated net incomeAttributable to:

Equity holders of the CompanyMinority interest

Earnings Per Share (In Dollars) Before Tax After TaxBasic earnings per share

Net income from continuing operations 7.45$ 6.12$Loss from discontinued operations 1.19)( 1.06)(Minority interest income 0.49)( 0.49)(Net income 5.77$ 4.57$

Diluted earnings per shareNet income from continuing operations 7.31$ 5.99$Loss from discontinued operations 1.16)( 1.03)(Minority interest income 0.48)( 0.48)(Net income 5.67$ 4.48$

2011

Delta Electronics, Inc. and SubsidiariesPro Forma Consolidated Statements of Income

For the Year Ended December 31, 2011(Expressed in thousands of New Taiwan dollars, except earnings per share data)

(Unaudited)

17,904,022

$ 164,585,4212,503,689

167,089,110

( 129,014,340)( 1,342,257)( 130,356,597)

36,732,513( 23,057,368)

13,675,1454,960,073

( 731,196)

( 3,207,665)

$ 12,155,409

$ 10,973,2671,182,142

$ 12,155,409

( 2,540,948)14,696,357

~90~

(11) Extraordinary gainThe subsidiary - DIH originally held 10.38% ownership of DGC (shown as “Financial assetscarried at cost”). Effective October 3, 2011, DGC was included in the Company’s consolidatedfinancial statements. The treatment for the equity investment in DGC was changed to the equitymethod assuming that the change was at the beginning of 2011 and not adopting retroactiveadjustment. The difference between investment cost and underlying equity in net assets isanalyzed and dealt with by following the allocation procedures of the acquisition cost specified inR.O.C. SFAS No. 25, “Business Combinations – Purchase Method”. As the fair value ofidentifiable net assets exceeded the investment cost, the excess was recognized as a reduction tothe carrying amounts of non-current assets of DGC in proportion to their fair values. Theremaining excess of $205,629 after the carrying amounts of identifiable net assets was reduced to$0 was recognized as extraordinary gain. Cash dividends received from DGC in 2011 wasaccounted for as investment income under the previous method; accordingly, investment incomeamounting to $153,267 was offset against the long-term equity investment account.

101

~91~

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pany

Not

e

111

~101

~

Cur

renc

y

Bal

ance

asof

Dec

embe

r31,

2012

Cur

renc

y

Bal

ance

asof

Dec

embe

r31,

2011

Num

bero

fsh

ares

Perc

enta

geof

owne

rshi

pC

urre

ncy

Boo

kva

lue

Cur

renc

yA

mou

ntC

urre

ncy

Am

ount

Del

taIn

tern

atio

nal

Hol

ding

Ltd.

Del

taPo

wer

Shar

pLt

d.H

ong

Kon

gO

pera

tions

man

agem

enta

nden

gine

erin

gse

rvic

es

NTD

$37

,556

NTD

$37

,556

10,0

00,0

0010

0.00

NTD

$57

,216

NTD

$60

3N

TD$

603

(Not

ea)

Del

taIn

tern

atio

nal

Hol

ding

Ltd.

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stic

s(U

SA)C

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20N

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500,

000

100.

00N

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12,3

44N

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ea)

Del

taIn

tern

atio

nal

Hol

ding

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Ace

Pilla

rH

oldi

ngC

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uity

inve

stm

ents

NTD

396,

555

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396,

555

2,85

8,71

810

0.00

NTD

419,

999

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85N

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ea)

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taIn

tern

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nal

Hol

ding

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827

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185,

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ea)

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com

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ncy

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nce

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ncy

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bero

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ount

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tyin

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133,

693

NTD

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304,

504,

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100.

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466,

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29,0

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outs

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nce

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ded

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embe

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iton

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nted

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sing

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ling

onto

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ount

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ea:

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ber0

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eC

ompa

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hein

vest

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inor

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rom

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ber1

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curr

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ansl

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ando

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chan

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embe

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tual

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ew

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ecau

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oard

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ote

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eac

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embe

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chth

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note

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ount

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otal

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lnot

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pany

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orth

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uara

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ea:

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ber0

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6875

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13,4

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1175

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5775

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19.1

175

days

--

544,

276

55.3

4

Nam

eof

the

coun

terp

arty

Nam

eof

trans

actio

npa

rties

Rel

atio

nshi

p

Tran

sact

ion

term

s

Des

crip

tion

ofan

dre

ason

sfor

diff

eren

cein

trans

actio

nte

rms

com

pare

dto

non-

rela

ted

party

trans

actio

nsA

ccou

ntso

rnot

esre

ceiv

able

(pay

able

)

Not

e

133

~123

~

Purc

hase

s(s

ales

)(N

ote

a)A

mou

nt

%of

tota

lPu

rcha

ses

(sal

es)

Cre

ditt

erm

sU

nitp

rice

Cre

ditp

erio

dB

alan

ce

%of

tota

lac

coun

tsor

note

sre

ceiv

able

(pay

able

)D

elta

Ele

ctro

nics

(Wuj

iang

)Tra

ding

Co.

,Ltd

.

Del

taG

reen

tech

(Chi

na)C

o.,L

td.

Aff

iliat

eden

terp

rise

Sale

s1,

402,

559

$56

.30

75da

ys-

-53

6,01

1$

66.9

7

Del

taE

lect

roni

cs(W

uhu)

Co.

,Ltd

.D

elta

Ele

ctro

nics

Inte

rnat

iona

lLtd

.A

ffili

ated

ente

rpri

seSa

les

1,84

2,26

021

.86

75da

ys-

-10

8,46

47.

24

Del

taE

lect

roni

cs(W

uhu)

Co.

,Ltd

.D

elta

Ele

ctro

nics

Int’

l(S

inga

pore

)Pte

.Ltd

.A

ffili

ated

ente

rpri

seSa

les

6,50

7,90

077

.23

75da

ys-

-1,

389,

689

92.7

5

Wuh

uD

elta

Tech

nolo

gyC

o.,

Ltd.

Del

taE

lect

roni

cs(W

uhu)

Co.

,Ltd

.A

ffili

ated

ente

rpri

seSa

les

440,

983

74.2

575

days

--

65,4

0874

.87

Del

taE

lect

roni

cs(C

henz

hou)

Co.

,Lt

d.

Del

taE

lect

roni

csIn

t’l

(Sin

gapo

re)P

te.L

td.

Aff

iliat

eden

terp

rise

Sale

s5,

216,

871

98.7

475

days

--

559,

437

98.2

9

Che

nzho

uD

elta

Tech

nolo

gyC

o.,

Ltd.

Del

taE

lect

roni

cs(C

henz

hou)

Co.

,Ltd

.A

ffili

ated

ente

rpri

seSa

les

2,52

1,45

998

.23

75da

ys-

-38

1,60

291

.27

PreO

ptix

(Jia

ngsu

)C

o.,L

td.

Del

taE

lect

roni

csIn

t’l

(Sin

gapo

re)P

te.L

td.

Aff

iliat

eden

terp

rise

Sale

s53

0,41

799

.63

75da

ys-

-72

,550

99.9

6

Del

taE

lect

roni

cs(J

apan

),In

c.D

elta

Ele

ctro

nics

Int’

l(S

inga

pore

)Pte

.Ltd

.A

ffili

ated

ente

rpri

seSa

les

434,

942

10.2

075

days

--

126,

540

15.9

8

Del

taG

reen

(Tia

njin

)In

dust

ries

Co.

,Lt

d.

Del

taE

lect

roni

csIn

t’l

(Sin

gapo

re)P

te.L

td.

Aff

iliat

eden

terp

rise

Sale

s51

9,64

878

.99

75da

ys-

-13

5,96

082

.42

Not

eN

ame

ofth

eco

unte

rpar

tyN

ame

oftr

ansa

ctio

npa

rtie

sR

elat

ions

hip

Tra

nsac

tion

term

s

Des

crip

tion

ofan

dre

ason

sfo

rdi

ffer

ence

intr

ansa

ctio

nte

rms

com

pare

dto

non-

rela

ted

part

ytr

ansa

ctio

nsA

ccou

nts

orno

tes

rece

ivab

le(p

ayab

le)

~124

~

Note

a:In

cludi

ngth

eser

vice

inco

mei

nexc

esso

f$10

0,000

.No

teb:

Thec

ollec

tiont

erm

stot

hird

parti

esar

erec

eipti

nadv

ance

or30

~90d

aysa

ftera

ccep

tance

.No

tec:

Selli

ngpr

iceis

base

don

mate

rials

cost

plus

adm

inist

ratio

nfe

esan

dre

lated

costs

.The

colle

ction

term

tore

lated

parti

esis

60~9

0da

ysaf

terde

liver

yan

dto

third

parti

esis

rece

ipti

nad

vanc

eor3

0~12

0da

ysaf

terde

liver

y.No

ted:

Selli

ngpr

iceis

base

don

norm

alpr

ice.T

heco

llecti

onter

mto

relat

edpa

rties

is70

days

starti

ngfro

mth

enex

tmon

than

dtot

hird

parti

esis

rece

ipti

nadv

ance

or30

~120

days

after

deliv

ery.

Purc

hase

s(sa

les)

(Not

ea)

Amou

nt

%of

total

Purc

hase

s(sa

les)

Cred

itter

ms

Unit

price

Cred

itpe

riod

Balan

ce

%of

total

acco

unts

orno

tesre

ceiv

able

(pay

able)

Delta

Elec

troni

cs(S

hang

hai)

Co.,

Ltd.

Delta

Gree

ntec

h(C

hina

)Co.,

Ltd.

Affil

iated

enter

prise

Sales

5,11

3,62

7$

99.3

475

days

--

1,42

9,25

5$

91.2

2

DelS

olar

Co.,

Ltd.

Delta

Elec

troni

cs(Ja

pan)

,Inc

.Af

filiat

eden

terpr

iseSa

les1,

179,

912

23.0

075

days

-(N

oteb

)55

8,03

159

.00

DelS

olar

Co.,

Ltd.

Delta

Ener

gySy

stem

s(It

aly)s

.r.l.

Asso

ciate

Sales

390,

146

7.00

90~1

20da

ys-

(Not

eb)

111,

157

12.0

0

DelS

olar

Co.,

Ltd.

Delta

Gree

ntec

h(C

hina

)Co.,

Ltd.

Affil

iated

enter

prise

Sales

114,

149

2.00

75da

ys-

(Not

eb)

41,8

064.0

0

DelS

olar

(Wuj

iang)

Ltd.

DelS

olar

Co.,

Ltd.

Affil

iated

enter

prise

Sales

3,62

5,64

090

.00

70da

ys-

(Not

eb)

818,

457

94.0

0

Cynt

ecCo

.,Lt

d.Cy

ntec

Inter

natio

nal

Ltd.

Affil

iated

enter

prise

Sales

2,01

7,66

165

.00

(Not

ec)

(Not

ec)

(Not

ec)

248,

046

42.2

0

Cynt

ecEl

ectro

nics

(Suz

hou)

Co.,L

td.

Cynt

ecIn

terna

tiona

lLt

d.Af

filiat

eden

terpr

iseSa

les3,

323,

024

100.

00(N

otec

)(N

otec

)(N

otec

)21

3,29

910

0.00

Cynt

ec(S

uzho

u)Co

.,Lt

d.Cy

ntec

Inter

natio

nal

Ltd.

Affil

iated

enter

prise

Sales

3,40

7,68

799

.98

(Not

ec)

(Not

ec)

(Not

ec)

228,

011

100.0

0

Cynt

ecIn

terna

tiona

lLtd

.Cy

ntec

Co.,

Ltd.

Affil

iated

enter

prise

Sales

477,

813

3.91

(Not

ec)

(Not

ec)

(Not

ec)

107,

714

2.06

Cynt

ecIn

terna

tiona

lLtd

.De

ltaEl

ectro

nics

Int’l

(Sin

gapo

re)P

te.Lt

d.Af

filiat

eden

terpr

iseSa

les19

4,53

21.

41(N

oted

)(N

oted

)(N

oted

)71

,457

1.37

Acco

unts

orno

tesre

ceiv

able

(pay

able)

Note

Nam

eoft

heco

unter

party

Nam

eoft

rans

actio

npa

rties

Relat

ions

hip

Tran

sacti

onter

ms

Desc

riptio

nofa

ndre

ason

sfor

diffe

renc

ein

trans

actio

nter

ms

com

pare

dton

on-re

lated

party

trans

actio

ns

135

~12

5~

I.R

ecei

vabl

esfr

omre

late

dpa

rtie

sin

exce

ssof

$100

,000

or20

%ca

pita

l:

Am

ount

Act

ion

adop

ted

for

over

due

acco

unts

Del

taE

lect

roni

csIn

t'lL

td.

Del

taE

lect

roni

cs(J

apan

),In

c.A

ffil

iate

den

terp

rise

$19

7,41

13.

84$

--

$83

,439

$-

Del

taE

lect

roni

csIn

t'lL

td.

DE

IL

ogis

tics

(US

A)

Cor

p.A

ffil

iate

den

terp

rise

3,96

0,45

33.

9919

5,29

7-

2,79

0,36

4-

Del

taE

lect

roni

csIn

t'lL

td.

Dig

ital

Pro

ject

ion

Ltd

.A

ssoc

iate

133,

523

3.94

--

50,0

06-

Del

taE

lect

roni

csIn

t'l(S

inga

pore

)P

te.L

td.

Del

taE

lect

roni

cs(D

ongg

uan)

Co.

,Ltd

.A

ffil

iate

den

terp

rise

823,

348

6.48

--

551,

760

-

Del

taE

lect

roni

csIn

t'l(S

inga

pore

)P

te.L

td.

Del

taE

lect

roni

csP

ower

(Don

ggua

n)C

o.,

Ltd

.A

ffil

iate

den

terp

rise

2,58

8,23

66.

33-

-2,

381,

310

-

Del

taE

lect

roni

csIn

t'l(S

inga

pore

)P

te.L

td.

Del

taE

lect

roni

cs(J

iang

su)

Ltd

.A

ffil

iate

den

terp

rise

895,

905

10.4

7-

-89

5,90

5-

Del

taE

lect

roni

csIn

t'l(S

inga

pore

)P

te.L

td.

Del

taE

lect

roni

csC

ompo

nent

s(W

ujia

ng)

Ltd

.A

ffil

iate

den

terp

rise

423,

097

7.74

76-

423,

097

-

Del

taE

lect

roni

csIn

t'l(S

inga

pore

)P

te.L

td.

Del

taE

lect

ro-O

ptic

s(W

ujia

ng)

Ltd

.A

ffil

iate

den

terp

rise

378,

203

14.2

5-

-37

8,20

3-

Del

taE

lect

roni

csIn

t'l(S

inga

pore

)P

te.L

td.

Del

taV

ideo

Dis

play

Sys

tem

(Wuj

iang

)L

td.

Aff

ilia

ted

ente

rpri

se56

0,61

78.

2221

-56

0,61

7-

Del

taE

lect

roni

csIn

t'l(S

inga

pore

)P

te.L

td.

Del

taE

lect

roni

cs(C

henz

hou)

Co.

,Ltd

.A

ffil

iate

den

terp

rise

337,

131

2.83

--

290,

933

-

Del

taE

lect

roni

csIn

t'l(S

inga

pore

)P

te.L

td.

Del

taE

lect

roni

cs(W

uhu)

Co.

,Ltd

.A

ffil

iate

den

terp

rise

318,

881

12.2

3-

-31

8,88

1-

Del

taE

lect

roni

csIn

t'l(S

inga

pore

)P

te.L

td.

Del

taE

lect

roni

cs(J

apan

),In

c.A

ffil

iate

den

terp

rise

219,

978

4.91

--

160,

490

-

Del

taE

lect

roni

csIn

t'l(S

inga

pore

)P

te.L

td.

Del

taE

lect

roni

csIn

tern

atio

nalL

td.

Aff

ilia

ted

ente

rpri

se16

7,01

610

.73

--

167,

016

-

Del

taE

lect

roni

csIn

t'l(S

inga

pore

)P

te.L

td.

Del

taN

etw

orks

(Don

ggua

n)L

td.

Aff

ilia

ted

ente

rpri

se10

6,25

33.

80-

-61

,822

-

Sub

sequ

ent

colle

ctio

ns(N

ote)

All

owan

cefo

rdo

ubtf

ulac

coun

tspr

ovid

edN

ame

ofcr

edit

orT

rans

acti

onpa

rtie

sR

elat

ions

hip

Bal

ance

ofre

ceiv

able

from

rela

ted

part

ies

Tur

nove

rra

te

Ove

rdue

rece

ivab

les

~126

~

Am

ount

Act

ion

adop

ted

foro

verd

ueac

coun

tsD

elta

Elec

troni

csIn

t'l(S

inga

pore

)Pte

.Ltd

.D

elta

Elec

troni

cs,I

nc.

Ulti

mat

epa

rent

com

pany

$6,

591,

606

3.22

$-

-$

1,98

5,75

1$

-

Del

taEl

ectro

nics

Int'l

(Sin

gapo

re)P

te.L

td.

Del

taEn

ergy

Syst

ems

(Sw

itzer

land

)AG

Ass

ocia

te14

5,97

94.

84-

-95

,571

-

Del

taEl

ectro

nics

Int'l

(Sin

gapo

re)P

te.L

td.

Del

taG

reen

tech

(USA

)Cor

pora

tion

Ass

ocia

te30

9,11

96.

71-

-29

4,13

9-

Del

taEl

ectro

nics

Int'l

(Sin

gapo

re)P

te.L

td.

Del

taPr

oduc

tsC

orpo

ratio

nR

elat

edpa

rtyin

subs

tanc

e26

0,33

43.

84-

-24

3,59

3-

Del

taEl

ectro

nics

(Don

ggua

n)C

o.,L

td.

Del

taEl

ectro

nics

Int’l

(Sin

gapo

re)P

te.

Ltd.

Aff

iliat

eden

terp

rise

1,09

4,54

30.

31-

-88

5,72

0-

Del

taEl

ectro

nics

(Don

ggua

n)C

o.,L

td.

Del

taEl

ectro

nics

Inte

rnat

iona

lLtd

.A

ffili

ated

ente

rpris

e16

0,09

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10-

-90

,885

-

Del

taEl

ectro

nics

Pow

er(D

ongg

uan)

Co.

,Ltd

.D

elta

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troni

csIn

tern

atio

nalL

td.

Aff

iliat

eden

terp

rise

865,

391

0.41

--

219,

109

-

Del

taEl

ectro

nics

Pow

er(D

ongg

uan)

Co.

,Ltd

.D

elta

Net

wor

ks(D

ongg

uan)

Ltd.

Aff

iliat

eden

terp

rise

132,

466

0.28

--

46,0

56-

Del

taEl

ectro

nics

Pow

er(D

ongg

uan)

Co.

,Ltd

.D

elta

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troni

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t’l(S

inga

pore

)Pte

.Lt

d.A

ffili

ated

ente

rpris

e2,

304,

965

0.33

--

2,30

4,96

5-

Del

taN

etw

orks

Inte

rnat

iona

lLtd

.D

elta

Net

wor

ks(D

ongg

uan)

Ltd.

Aff

iliat

eden

terp

rise

3,01

1,45

511

.88

--

2,25

3,53

5-

Del

taN

etw

orks

Inte

rnat

iona

lLtd

.D

NIL

ogis

tic(U

SA)C

orp.

Aff

iliat

eden

terp

rise

706,

884

14.7

0-

-64

7,30

4-

Del

taN

etw

orks

Inte

rnat

iona

lLtd

.D

elta

Net

wor

ks,I

nc.(

Taiw

an)

Aff

iliat

eden

terp

rise

102,

307

8.99

--

80,9

56-

Del

taN

etw

orks

(Don

ggua

n)Lt

d.D

elta

Net

wor

ksIn

tern

atio

nalL

td.

Aff

iliat

eden

terp

rise

2,65

5,31

20.

61-

-1,

742,

400

-

Del

taN

etw

orks

,Inc

.(T

aiw

an)

Del

taN

etw

orks

Inte

rnat

iona

lLtd

.A

ffili

ated

ente

rpris

e27

3,85

31.

85-

-17

8,15

7-

Nam

eof

cred

itor

Tran

sact

ion

parti

esR

elat

ions

hip

Bal

ance

ofre

ceiv

able

from

rela

ted

parti

esTu

rnov

erra

te

Ove

rdue

rece

ivab

les

Subs

eque

ntco

llect

ions

(Not

e)

Allo

wan

cefo

rdo

ubtfu

lac

coun

tspr

ovid

ed

137

~127

~

Am

ount

Act

ion

adop

ted

foro

verd

ueac

coun

tsD

elta

Elec

troni

cs(J

iang

su)

Ltd.

Del

taEl

ectro

nics

Inte

rnat

iona

lLtd

.A

ffili

ated

ente

rpris

e36

7,04

0$

11.8

6-

$-

367,

040

$-

$

Del

taEl

ectro

nics

(Jia

ngsu

)Lt

d.D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Lt

d.A

ffili

ated

ente

rpris

e4,

089,

658

9.11

--

4,08

9,65

8-

Del

taEl

ectro

nics

(Jia

ngsu

)Lt

d.D

elta

Elec

troni

cs(W

ujia

ng)T

radi

ngC

o.,

Ltd.

Aff

iliat

eden

terp

rise

313,

990

2.91

--

169,

672

-

Del

taEl

ectro

nics

Com

pone

nts(

Wuj

iang

)Ltd

.D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Lt

d.A

ffili

ated

ente

rpris

e84

1,87

38.

94-

-84

1,87

3-

Del

taEl

ectro

-Opt

ics

(Wuj

iang

)Ltd

.D

elta

Elec

troni

csIn

tern

atio

nalL

td.

Aff

iliat

eden

terp

rise

117,

811

11.6

2-

-11

7,81

1-

Del

taEl

ectro

-Opt

ics

(Wuj

iang

)Ltd

.D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Lt

d.A

ffili

ated

ente

rpris

e30

3,71

29.

95-

-30

3,71

2-

Del

taEl

ectro

-Opt

ics

(Wuj

iang

)Ltd

.D

elta

Elec

troni

cs(S

hang

hai)

Co.

,Ltd

.A

ffili

ated

ente

rpris

e1,

380,

893

4.13

--

790,

052

-

Del

taV

ideo

Dis

play

Syst

em(W

ujia

ng)L

td.

Del

taEl

ectro

nics

Inte

rnat

iona

lLtd

.A

ffili

ated

ente

rpris

e37

5,10

013

.78

--

375,

100

-

Del

taV

ideo

Dis

play

Syst

em(W

ujia

ng)L

td.

Del

taEl

ectro

nics

(Wuj

iang

)Tra

ding

Co.

,Lt

d.A

ffili

ated

ente

rpris

e54

4,27

62.

70-

-27

8,47

4-

Del

taEl

ectro

nics

(Wuj

iang

)Tr

adin

gC

o.,L

td.

Del

taG

reen

tech

(Chi

na)C

o.,L

td.

Aff

iliat

eden

terp

rise

536,

011

2.99

--

318,

437

-

Del

taEl

ectro

nics

(Wuh

u)C

o.,L

td.

Del

taEl

ectro

nics

Inte

rnat

iona

lLtd

.A

ffili

ated

ente

rpris

e10

8,46

417

.89

--

108,

464

-

Del

taEl

ectro

nics

(Wuh

u)C

o.,L

td.

Del

taEl

ectro

nics

Int’l

(Sin

gapo

re)P

te.

Ltd.

Aff

iliat

eden

terp

rise

1,38

9,68

95.

23-

-1,

384,

818

-

Del

taEl

ectro

nics

(Che

nzho

u)C

o.,L

td.

Del

taEl

ectro

nics

Int’l

(Sin

gapo

re)P

te.

Ltd.

Aff

iliat

eden

terp

rise

559,

437

8.36

--

559,

437

-

Che

nzho

uD

elta

Tech

nolo

gyC

o.,L

td.

Del

taEl

ectro

nics

(Che

nzho

u)C

o.,L

td.

Aff

iliat

eden

terp

rise

381,

602

91.2

7-

-31

9,54

9-

Subs

eque

ntco

llect

ions

(Not

e)

Allo

wan

cefo

rdo

ubtfu

lac

coun

tspr

ovid

edN

ame

ofcr

edito

rTr

ansa

ctio

npa

rties

Rel

atio

nshi

p

Bal

ance

ofre

ceiv

able

from

rela

ted

parti

esTu

rnov

erra

te

Ove

rdue

rece

ivab

les

~128

~

Not

e:Th

eam

ount

repr

esen

tsco

llect

ions

subs

eque

ntto

Dec

embe

r31,

2012

upto

Mar

ch11

,201

3.J.

Info

rmat

ion

onde

rivat

ive

trans

actio

ns:

The

info

rmat

ion

onde

rivat

ive

trans

actio

nsof

inve

stee

com

pani

esar

eas

follo

ws:

(a)

Mar

ketr

isk:T

hein

vest

eeco

mpa

nies

ente

red

into

thes

eco

ntra

ctsi

nor

dert

ohe

dge.

Acc

ordi

ngly

,no

mat

eria

lmar

ketr

isk

isex

pect

ed.

(b)

Cre

ditr

isk:T

heba

nks,

whi

chth

esu

bsid

iarie

sde

alw

ith,a

real

lin

good

cred

itsta

ndin

gan

dth

esu

bsid

iarie

sde

alw

ithse

vera

lban

ksto

disp

erse

the

cred

itris

k.Th

eref

ore,

the

poss

ibili

tyis

low

fort

heba

nks

nott

oco

mpl

yw

ithth

ete

rmso

fthe

cont

ract

s.(c

)Li

quid

ityris

k:Su

bsid

iarie

shav

esu

ffici

entw

orki

ngca

pita

l;th

eref

ore,

nom

ater

iall

iqui

dity

risk

isex

pect

ed.

(d)

Cas

hflo

wris

kdu

eto

chan

gesi

nin

tere

stra

te:S

ubsid

iarie

sdid

note

nter

into

any

deriv

ativ

eco

ntra

ctth

atis

inte

rest

rate

rela

ted;

ther

efor

e,no

mat

eria

lcas

hflo

wris

kdu

eto

chan

gesi

nin

tere

stra

teis

expe

cted

.

The

natu

rean

dre

late

din

form

atio

nof

inve

stee

com

pani

es’o

utsta

ndin

gde

rivat

ive

trans

actio

nsas

ofD

ecem

ber3

1,20

12ar

esu

mm

ariz

edas

follo

ws:Am

ount

Act

ion

adop

ted

foro

verd

ueac

coun

tsD

elta

Elec

troni

cs(J

apan

),In

c.D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Lt

d.A

ffili

ated

ente

rpris

e$

126,

540

4.91

$-

-$

83,6

37$

-

Del

taG

reen

(Tia

njin

)In

dust

riesC

o.,L

td.

Del

taEl

ectro

nics

Int’l

(Sin

gapo

re)P

te.

Ltd.

Aff

iliat

eden

terp

rise

135,

960

6.01

--

87,3

52-

Del

taEl

ectro

nics

(Sha

ngha

i)C

o.,L

td.

Del

taG

reen

tech

(Chi

na)C

o.,L

td.

Aff

iliat

eden

terp

rise

1,42

9,25

56.

10-

-81

1,51

0-

Del

Sola

rCo.

,Ltd

.D

elta

Elec

troni

cs(J

apan

),In

c.A

ffili

ated

ente

rpris

e55

8,03

13.

84-

-34

8,56

3-

Del

Sola

rCo.

,Ltd

.D

elta

Ener

gySy

stem

s(Ita

ly)s

.r.l.

Aff

iliat

eden

terp

rise

111,

157

3.85

--

71,1

82-

Del

Sola

r(W

ujia

ng)L

td.

Del

Sola

rCo.

,Ltd

.A

ffili

ated

ente

rpris

e81

8,45

710

.18

--

379,

013

-

Cyn

tec

Co.

,Ltd

.C

ynte

cIn

tern

atio

nalL

td.

Aff

iliat

eden

terp

rise

248,

046

9.50

--

248,

046

-

Cyn

tec

(Suz

hou)

Co.

,Ltd

.C

ynte

cIn

tern

atio

nalL

td.

Aff

iliat

eden

terp

rise

213,

299

13.6

0-

-21

3,29

9-

Cyn

tec

Elec

troni

cs(S

uzho

u)C

o.,L

td.

Cyn

tec

Inte

rnat

iona

lLtd

.A

ffili

ated

ente

rpris

e22

8,01

112

.55

--

228,

011

-

Cyn

tec

Inte

rnat

iona

lLtd

.C

ynte

cC

o.,L

td.

Aff

iliat

eden

terp

rise

107,

714

4.87

--

--

Nam

eof

cred

itor

Tran

sact

ion

parti

esR

elat

ions

hip

Bal

ance

ofre

ceiv

able

from

rela

ted

parti

esTu

rnov

erra

te

Ove

rdue

rece

ivab

les

Subs

eque

ntco

llect

ions

(Not

e)

Allo

wan

cefo

rdo

ubtfu

lac

coun

tspr

ovid

ed

139

~129

~

Con

tract

perio

d

A.

Del

taEl

ectro

nics

Int’l

(Sin

gapo

re)P

te.L

td.(

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bsid

iary

ofth

eC

ompa

ny)

Forw

ard

fore

ign

curr

ency

cont

ract

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llU

SD,b

uyR

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1.18

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ard

fore

ign

curr

ency

cont

ract

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llU

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uyJP

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,800

2012

.10.

05~

2013

.03.

14

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ard

fore

ign

curr

ency

cont

ract

s–Se

llU

SD,b

uyEU

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400

2012

.11.

02~

2013

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14

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ard

fore

ign

curr

ency

cont

ract

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uyU

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ellE

UR

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0.05

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13.0

4.29

Forw

ard

fore

ign

curr

ency

cont

ract

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llU

SD,b

uyC

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ZK36

,500

2012

.10.

08~

2013

.01.

23

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ard

fore

ign

curr

ency

cont

ract

s–Se

llU

SD,b

uySG

DSG

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379

2012

.03.

01~

2013

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11

The

netl

ossr

ecog

nize

don

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ard

fore

ign

curr

ency

cont

ract

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year

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ount

edto

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333.

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ard

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ign

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ract

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3.28

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ard

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ign

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cont

ract

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uyN

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2.27

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ard

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ract

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ard

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ign

curr

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year

ende

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ecem

ber3

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ount

edto

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taEl

ectro

nics

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rnat

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ard

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ract

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year

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ard

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ract

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000

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19~

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elta

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troni

cs(D

ongg

uan)

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,Ltd

.(A

subs

idia

ryof

DH

K)

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ivat

ive

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actio

nsPa

rval

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ontra

ctam

ount

orno

min

alpr

inci

pal(

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e)

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ain

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ard

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ency

cont

ract

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year

ende

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ber3

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ount

edto

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.

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deriv

ativ

efin

anci

alin

stru

men

tshe

ldby

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taEl

ectro

nics

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ggua

n)C

o.,L

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ere

alls

ettle

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ene

tlos

srec

ogni

zed

onfo

rwar

dfo

reig

ncu

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cyco

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ctsf

orth

eye

aren

ded

Dec

embe

r31,

2012

amou

nted

to$3

7,42

7.

~130

~

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tract

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d

F.D

elta

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troni

csPo

wer

(Don

ggua

n)C

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td.(

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bsid

iary

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HK

)

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ard

fore

ign

curr

ency

cont

ract

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llU

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1.01

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1.22

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ard

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ign

curr

ency

cont

ract

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uyU

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ellR

MB

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1.01

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13.0

1.22

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taN

etw

orks

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ggua

n)Lt

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subs

idia

ryof

DN

HK

)

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ard

fore

ign

curr

ency

cont

ract

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llU

SD,b

uyR

MB

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1.06

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ard

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ign

curr

ency

cont

ract

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llR

MB

,buy

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USD

20,0

0020

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6.01

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taN

etw

orks

Inte

rnat

iona

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man

)

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ard

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ign

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cont

ract

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llU

SD,b

uyR

MB

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6.04

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ard

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ign

curr

ency

cont

ract

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llR

MB

,buy

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0020

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6.04

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elSo

larC

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ompa

ny)

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ard

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ign

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ract

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uyN

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UR

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2.21

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netg

ain

reco

gniz

edon

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ard

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ign

curr

ency

cont

ract

sfor

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year

ende

dD

ecem

ber3

1,20

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ount

edto

$1,7

93.

J.D

elSo

lar(

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iang

)Co.

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subs

idia

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DSH

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Cyn

tec

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.(A

subs

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the

Com

pany

)

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ard

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ign

curr

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cont

ract

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llU

SD,b

uyTW

DU

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2012

.10.

26~

2013

.02.

20

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ard

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ign

curr

ency

cont

ract

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llEU

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uyTW

DU

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2012

.11.

16~

2013

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15

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netg

ain

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ign

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ract

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year

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ount

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06.

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sand

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curr

ency

optio

nco

ntra

ctsf

orth

eye

aren

ded

Dec

embe

r31,

2012

amou

nted

to$2

7,69

7an

dth

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real

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gain

reco

gniz

edon

finan

cial

inst

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ents

unde

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lder

s'eq

uity

amou

nted

to$6

,108

asth

ese

met

allt

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iteria

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edge

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g.

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netl

ossr

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nize

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ard

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ign

curr

ency

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ract

sfor

the

year

ende

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ecem

ber3

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ount

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,855

and

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unre

aliz

edga

inre

cogn

ized

onfin

anci

alin

stru

men

tsun

ders

tock

hold

ers'

equi

tyam

ount

edto

$6,7

14as

thes

em

etal

lthe

crite

riafo

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ting.

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ain

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ract

sfor

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year

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and

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unre

aliz

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cogn

ized

onfin

anci

alin

stru

men

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ders

tock

hold

ers'

equi

tyam

ount

edto

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813

asth

ese

met

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edge

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g.

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deriv

ativ

efin

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alin

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men

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ldby

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rCo.

,Ltd

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netl

ossr

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nize

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ign

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ency

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the

year

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ount

edto

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20.D

eriv

ativ

etra

nsac

tions

Parv

alue

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inal

prin

cipa

l(N

ote)

141

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~

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e:U

nit:

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sand

sofd

olla

rs.

Con

tract

perio

d

L.C

ynte

c(S

uzho

u)C

o.,L

td.(

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bsid

iary

ofth

eC

HK

)

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ard

fore

ign

curr

ency

cont

ract

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llU

SD,b

uyJP

YU

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200

2012

.10.

22~

2013

.02.

21

The

netl

ossr

ecog

nize

don

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ard

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ign

curr

ency

cont

ract

sfor

the

year

ende

dD

ecem

ber3

1,20

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ount

edto

$7,8

22.

M.

Cyn

tec

Elec

troni

cs(S

uzho

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o.,L

td.

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ard

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ign

curr

ency

cont

ract

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llU

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uyJP

YU

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2.17

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13.0

1.24

The

netl

ossr

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nize

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ign

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ract

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year

ende

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ivat

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rval

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iscl

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vest

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nlan

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ts:In

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icin

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itted

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lect

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ongg

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itted

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vest

men

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mis

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the

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taliz

atio

nof

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ings

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S$25

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perm

itted

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vest

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mis

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clud

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ainl

and

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na.

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eh:

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ptfo

rthe

faci

lity

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S$12

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itted

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vest

men

tCom

mis

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,the

capi

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atio

nof

earn

ings

ofU

S$2,

068

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itted

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vest

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clud

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umul

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na.

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ei:

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faci

lity

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itted

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vest

men

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mis

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nof

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itted

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vest

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mis

sion

isex

clud

edfro

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edby

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issio

nis

US

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chan

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nce

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mis

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itted

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vest

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tCom

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clud

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ote

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perm

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ainl

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el:

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ptfo

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faci

lity

ofU

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perm

itted

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vest

men

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mis

sion

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taliz

atio

nof

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nis

excl

uded

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pany

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ount

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men

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dCh

ina.

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em

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ion

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20is

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uded

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pany

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ount

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vest

men

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ote

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cept

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edby

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onis

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uded

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pany

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ount

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vest

men

tin

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nlan

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ote

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cept

fort

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7,52

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hein

vest

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edby

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omm

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on.

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ep:

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ptfo

rthe

faci

lity

ofU

S$31

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perm

itted

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vest

men

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mis

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,the

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atio

nof

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ings

ofU

S$26

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rmitt

edby

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stm

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nis

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uded

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pany

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ount

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vest

men

tin

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nlan

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ina.

Not

eq:

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ptfo

rthe

faci

lity

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S$37

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edby

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stm

entC

omm

issio

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entC

omm

issio

nis

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uded

from

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pany

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ount

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vest

men

tin

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nlan

dCh

ina.

Not

er:

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uD

elta

Tech

nolo

gyC

o.,L

td.,

Chen

zhou

Del

taTe

chno

logy

Co.

,Ltd

.,D

elta

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gyTe

chno

logy

(Sha

ngha

i)C

o.,L

td.,

Del

taEn

ergy

Tech

nolo

gy(D

ongg

uan)

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.,D

elta

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iang

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d.,D

elta

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u)C

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td.,

and

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ergy

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hou)

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the

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stee

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pani

esof

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pany

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ainl

and

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ccor

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ere

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vest

men

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miss

ion,

the

rein

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vest

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nies

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and

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equi

red

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tain

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appr

oval

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vest

men

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inve

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enzh

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elta

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atio

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vest

men

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ount

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ainl

and

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na.

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es:

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taN

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orks

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iang

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rect

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ento

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pany

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liqui

date

don

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011.

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pany

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dire

ctin

vest

men

tand

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ings

turn

edin

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vest

men

tin

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taN

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iang

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igin

ally

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oved

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vest

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sion

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ctiv

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mul

ated

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mitt

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anto

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ted

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pect

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ny’s

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mul

ated

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anto

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nlan

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ina.

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ec:

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ordi

ngto

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ulat

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,the

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enta

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ed:

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last

appl

icat

ion

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vest

men

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mis

sion

was

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ount

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vest

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sign

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ctly

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inve

stee

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rect

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inga

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)Pte

.Ltd

.D

elta

Vid

eoD

ispl

aySy

stem

(Wuj

iang

)Ltd

.3

Sale

s4,

541,

214

(Not

ed)

2.64

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.D

elta

Elec

troni

cs(C

henz

hou)

Co.

,Ltd

.3

Sale

s1,

257,

864

(Not

ed)

0.73

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.C

henz

hou

Del

taTe

chno

logy

Co.

,Ltd

.3

Sale

s15

6,36

9(N

ote

d)0.

09

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.D

elta

Elec

troni

cs(W

uhu)

Co.

,Ltd

.3

Sale

s3,

475,

624

(Not

ed)

2.02

Tran

sact

ion

term

s

Perc

enta

geof

tota

lcom

bine

dre

venu

eor

tota

lass

ets(

Not

ec)

Num

ber

(Not

ea)

Nam

eof

coun

terp

arty

Nam

eof

trans

actio

npa

rties

Rel

atio

nshi

p(N

ote

b)Su

bjec

tA

mou

nt(N

ote

i)

151

~141

~

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.W

uhu

Del

taTe

chno

logy

Co.

,Ltd

.3

Sale

s13

2,84

4$

(Not

ed)

0.08

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.D

elta

Elec

troni

cs(J

apan

),In

c.3

Sale

s80

5,92

7(N

ote

d)0.

47

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.D

elta

Elec

troni

csIn

tern

atio

nalL

td.

3Sa

les

2,39

2,04

8(N

ote

d)1.

39

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.Pr

eOpt

ix(J

iang

su)C

o.,L

td.

3Sa

les

203,

601

(Not

ed)

0.12

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.D

elta

Net

wor

ks(D

ongg

uan)

Ltd.

3Sa

les

401,

148

(Not

ed)

0.23

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.D

elta

Gre

en(T

ianj

in)I

ndus

tries

Co.

,Ltd

.3

Sale

s23

0,62

6(N

ote

d)0.

13

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.D

eltro

nics

(Net

herla

nds)

B.V

.3

Sale

s22

6,62

3(N

ote

d)0.

13

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.D

elta

Elec

troni

cs,I

nc.

2Sa

les

20,5

36,6

79(N

ote

d)11

.96

3D

elta

Elec

troni

cs(D

ongg

uan)

Co.

,Ltd

.D

elta

Elec

troni

csIn

tern

atio

nalL

td.

3Sa

les

660,

967

(Not

ed)

0.38

3D

elta

Elec

troni

cs(D

ongg

uan)

Co.

,Ltd

.D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.3

Sale

s7,

820,

141

(Not

ed)

4.55

4D

elta

Elec

troni

csPo

wer

(Don

ggua

n)C

o.,L

td.

Del

taEl

ectro

nics

Inte

rnat

iona

lLtd

.3

Sale

s7,

484,

655

(Not

ed)

4.36

4D

elta

Elec

troni

csPo

wer

(Don

ggua

n)C

o.,L

td.

Del

taN

etw

orks

(Don

ggua

n)Lt

d.3

Sale

s54

4,28

0(N

ote

d)0.

32

4D

elta

Elec

troni

csPo

wer

(Don

ggua

n)C

o.,L

td.

Del

taEl

ectro

nics

Int’l

(Sin

gapo

re)P

te.L

td.

3Sa

les

17,9

44,5

99(N

ote

d)10

.45

5D

elta

Net

wor

ksIn

tern

atio

nalL

td.

Del

taN

etw

orks

(Don

ggua

n)Lt

d.3

Sale

s13

,280

,309

(Not

ed)

7.73

5D

elta

Net

wor

ksIn

tern

atio

nalL

td.

DN

ILog

istic

(USA

)Cor

p.3

Sale

s3,

245,

963

(Not

ed)

1.89

5D

elta

Net

wor

ksIn

tern

atio

nalL

td.

Aye

com

Tech

nolo

gyC

o.,L

td.

3Sa

les

573,

141

(Not

ed)

0.33

5D

elta

Net

wor

ksIn

tern

atio

nalL

td.

Del

taN

etw

orks

,Inc

.(Ta

iwan

)3

Sale

s43

4,47

6(N

ote

d)0.

25

6D

elta

Net

wor

ks(D

ongg

uan)

Ltd.

Del

taN

etw

orks

Inte

rnat

iona

lLtd

.3

Sale

s14

,627

,257

(Not

ed)

8.52

Num

ber

(Not

ea)

Nam

eof

coun

terp

arty

Nam

eof

trans

actio

npa

rties

Rel

atio

nshi

p(N

ote

b)Su

bjec

tA

mou

nt(N

ote

i)Tr

ansa

ctio

nte

rms

Perc

enta

geof

tota

lcom

bine

dre

venu

eor

tota

lass

ets(

Not

ec)

~142

~

7D

elta

Net

wor

ks,I

nc.(

Taiw

an)

Del

taN

etw

orks

Inte

rnat

iona

lLtd

.3

Sale

s90

9,74

3$

(Not

ed)

0.53

8A

yeco

mTe

chno

logy

Co.

,Ltd

.D

elta

Net

wor

ksIn

tern

atio

nalL

td.

3Sa

les

207,

011

(Not

ed)

0.12

9D

elta

Elec

troni

cs(J

iang

su)L

td.

Del

taEl

ectro

nics

Inte

rnat

iona

lLtd

.3

Sale

s4,

848,

970

(Not

ed)

2.82

9D

elta

Elec

troni

cs(J

iang

su)L

td.

Del

taEl

ectro

nics

Int’l

(Sin

gapo

re)P

te.L

td.

3Sa

les

28,6

73,6

09(N

ote

d)16

.69

9D

elta

Elec

troni

cs(J

iang

su)L

td.

Del

taEl

ectro

nics

(Wuj

iang

)Tra

ding

Co.

,Ltd

.3

Sale

s94

4,49

2(N

ote

d)0.

55

10D

elta

Elec

troni

csC

ompo

nent

s(W

ujia

ng)L

td.

Del

taEl

ectro

nics

Int’l

(Sin

gapo

re)P

te.L

td.

3Sa

les

5,77

4,14

9(N

ote

d)3.

36

11D

elta

Elec

tro-O

ptic

s(W

ujia

ng)L

td.

Del

taEl

ectro

nics

Inte

rnat

iona

lLtd

.3

Sale

s1,

456,

860

(Not

ed)

0.85

11D

elta

Elec

tro-O

ptic

s(W

ujia

ng)L

td.

Del

taEl

ectro

nics

Int’l

(Sin

gapo

re)P

te.L

td.

3Sa

les

2,22

6,50

5(N

ote

d)1.

30

11D

elta

Elec

tro-O

ptic

s(W

ujia

ng)L

td.

Del

taEl

ectro

nics

(Sha

ngha

i)C

o.,L

td.

3Sa

les

4,71

1,69

2(N

ote

d)2.

74

12D

elta

Vid

eoD

ispl

aySy

stem

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iang

)Ltd

.D

elta

Elec

troni

csIn

tern

atio

nalL

td.

3Sa

les

5,16

8,78

9(N

ote

d)3.

01

12D

elta

Vid

eoD

ispl

aySy

stem

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iang

)Ltd

.D

elta

Elec

troni

cs(W

ujia

ng)T

radi

ngC

o.,L

td.

3Sa

les

1,36

4,87

2(N

ote

d)0.

79

13D

elta

Elec

troni

cs(W

ujia

ng)T

radi

ngC

o.,L

td.

Del

taG

reen

tech

(Chi

na)C

o.,L

td.

3Sa

les

1,40

2,55

9(N

ote

e)0.

82

14D

elta

Elec

troni

cs(W

uhu)

Co.

,Ltd

.D

elta

Elec

troni

csIn

tern

atio

nalL

td.

3Sa

les

1,84

2,26

0(N

ote

d)1.

07

14D

elta

Elec

troni

cs(W

uhu)

Co.

,Ltd

.D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.3

Sale

s6,

507,

900

(Not

ed)

3.79

15W

uhu

Del

taTe

chno

logy

Co.

,Ltd

.D

elta

Elec

troni

cs(W

uhu)

Co.

,Ltd

.3

Sale

s44

0,98

3(N

ote

d)0.

26

16D

elta

Elec

troni

cs(C

henz

hou)

Co.

,Ltd

.D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.3

Sale

s5,

216,

871

(Not

ed)

3.04

17C

henz

hou

Del

taTe

chno

logy

Co.

,Ltd

.D

elta

Elec

troni

cs(C

henz

hou)

Co.

,Ltd

.3

Sale

s2,

521,

459

(Not

ed)

1.47

18Pr

eOpt

ix(J

iang

su)C

o.,L

td.

Del

taEl

ectro

nics

Int’l

(Sin

gapo

re)P

te.L

td.

3Sa

les

421,

708

(Not

ed)

0.25

Tran

sact

ion

term

s

Perc

enta

geof

tota

lcom

bine

dre

venu

eor

tota

lass

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ec)

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ber

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ea)

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eof

coun

terp

arty

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eof

trans

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npa

rties

Rel

atio

nshi

p(N

ote

b)Su

bjec

tA

mou

nt(N

ote

i)

153

~143

~

19D

elta

Elec

troni

cs(J

apan

),In

c.D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.3

Sale

s43

4,94

2$

(Not

ed)

0.25

20D

elta

Gre

en(T

ianj

in)I

ndus

tries

Co.

,Ltd

.D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.3

Sale

s51

9,64

8(N

ote

d)0.

30

21D

elta

Elec

troni

cs(S

hang

hai)

Co.

,Ltd

.D

elta

Gre

ente

ch(C

hina

)Co.

,Ltd

.3

Sale

s5,

110,

064

(Not

ee)

2.98

22D

elSo

larC

o.,L

td.

Del

taEl

ectro

nics

(Jap

an),

Inc.

3Sa

les

1,17

9,91

2(N

ote

d)0.

69

22D

elSo

larC

o.,L

td.

Del

taG

reen

tech

(Chi

na)C

o.,L

td.

3Sa

les

114,

149

(Not

ee)

0.07

23D

elSo

lar(

Wuj

iang

)Ltd

.D

elSo

larC

o.,L

td.

3Sa

les

3,62

5,64

0(N

ote

f)2.

11

24C

ynte

cIn

tern

atio

nalL

tdC

ynte

cC

o.,L

td.

3Sa

les

477,

813

(Not

eg)

0.28

24C

ynte

cIn

tern

atio

nalL

td.

Del

taEl

ectro

nics

Int’l

(Sin

gapo

re)P

te.L

td.

3Sa

les

194,

532

(Not

ef)

0.11

25C

ynte

cC

o.,L

td.

Cyn

tec

Inte

rnat

iona

lLtd

.3

Sale

s2,

017,

661

(Not

eg)

1.17

26C

ynte

c(S

uzho

u)C

o.,L

td.

Cyn

tec

Inte

rnat

iona

lLtd

.3

Sale

s3,

323,

024

(Not

eg)

1.93

27C

ynte

cEl

ectro

nics

(Suz

hou)

Co.

,Ltd

.C

ynte

cIn

tern

atio

nalL

td.

3Sa

les

3,40

7,68

7(N

ote

g)1.

98

0D

elta

Elec

troni

cs,I

nc.

Del

taEl

ectro

nics

Int’l

(Sin

gapo

re)P

te.L

td.

1O

ther

rece

ivab

les

280,

000

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ed)

0.16

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elta

Elec

troni

cs,I

nc.

Del

Sola

rCo.

,Ltd

.1

Acc

ount

srec

eiva

ble

275,

413

(Not

ed)

0.16

0D

elta

Elec

troni

cs,I

nc.

Del

taEl

ectro

nics

Int’l

(Sin

gapo

re)P

te.L

td.

1A

ccou

ntsr

ecei

vabl

e99

6,23

9(N

ote

d)0.

58

0D

elta

Elec

troni

cs,I

nc.

Del

taEl

ectro

nics

Inte

rnat

iona

lLtd

.1

Acc

ount

srec

eiva

ble

336,

057

(Not

ed)

0.20

1D

elta

Elec

troni

csIn

tern

atio

nalL

td.

Del

taEl

ectro

nics

(Jap

an),

Inc.

3A

ccou

ntsr

ecei

vabl

e19

7,41

1(N

ote

d)0.

11

1D

elta

Elec

troni

csIn

tern

atio

nalL

td.

DEI

Logi

stic

s(U

SA)C

orp.

3A

ccou

ntsr

ecei

vabl

e3,

960,

453

(Not

ed)

2.31

Num

ber

(Not

ea)

Nam

eof

coun

terp

arty

Nam

eof

trans

actio

npa

rties

Rel

atio

nshi

p(N

ote

b)Su

bjec

tA

mou

nt(N

ote

i)Tr

ansa

ctio

nte

rms

Perc

enta

geof

tota

lcom

bine

dre

venu

eor

tota

lass

ets(

Not

ec)

~144

~

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.D

elta

Elec

troni

cs(D

ongg

uan)

Co.

,Ltd

.3

Acc

ount

srec

eiva

ble

823,

348

$(N

ote

d)0.

48

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.D

elta

Elec

troni

csPo

wer

(Don

ggua

n)C

o.,L

td.

3A

ccou

ntsr

ecei

vabl

e2,

588,

236

(Not

ed)

1.51

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.D

elta

Elec

troni

cs(J

iang

su)L

td.

3A

ccou

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ecei

vabl

e89

5,90

5(N

ote

d)0.

52

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.D

elta

Elec

troni

csC

ompo

nent

s(W

ujia

ng)L

td.

3A

ccou

ntsr

ecei

vabl

e42

3,09

7(N

ote

d)0.

25

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

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.Ltd

.D

elta

Elec

tro-O

ptic

s(W

ujia

ng)L

td.

3A

ccou

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ecei

vabl

e37

8,20

3(N

ote

d)0.

22

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.D

elta

Vid

eoD

ispl

aySy

stem

(Wuj

iang

)Ltd

.3

Acc

ount

srec

eiva

ble

560,

617

(Not

ed)

0.33

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.D

elta

Elec

troni

cs(C

henz

hou)

Co.

,Ltd

.3

Acc

ount

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ble

337,

131

(Not

ed)

0.20

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.D

elta

Elec

troni

cs(W

uhu)

Co.

,Ltd

.3

Acc

ount

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ble

318,

881

(Not

ed)

0.19

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.D

elta

Elec

troni

cs(J

apan

),In

c.3

Acc

ount

srec

eiva

ble

219,

978

(Not

ed)

0.13

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.D

elta

Elec

troni

csIn

tern

atio

nalL

td.

3A

ccou

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ecei

vabl

e16

7,01

6(N

ote

d)0.

10

2D

elta

Elec

troni

csIn

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inga

pore

)Pte

.Ltd

.D

elta

Net

wor

ks(D

ongg

uan)

Ltd.

3A

ccou

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vabl

e10

6,25

3(N

ote

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06

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

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.Ltd

.D

elta

Elec

troni

cs,I

nc.

2A

ccou

ntsr

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vabl

e6,

591,

606

(Not

ed)

3.62

3D

elta

Elec

troni

cs(D

ongg

uan)

Co.

,Ltd

.D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.3

Acc

ount

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eiva

ble

1,09

4,54

3(N

ote

d)0.

60

3D

elta

Elec

troni

cs(D

ongg

uan)

Co.

,Ltd

.D

elta

Elec

troni

csIn

tern

atio

nalL

td.

3A

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Acc

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Acc

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olid

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lesr

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ue.

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ed:

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eis

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ith.I

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Fort

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embe

r31,

2011

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taEl

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elta

Elec

troni

cs(C

henz

hou)

Co.

,Ltd

.3

Sale

s1,

080,

417

(Not

ed)

0.66

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.C

henz

hou

Del

taTe

chno

logy

Co.

,Ltd

.3

Sale

s35

7,23

0(N

ote

d)0.

22

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.D

elta

Elec

troni

cs(W

uhu)

Co.

,Ltd

.3

Sale

s2,

944,

013

(Not

ed)

1.81

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.W

uhu

Del

taTe

chno

logy

Co.

,Ltd

.3

Sale

s32

3,41

5(N

ote

d)0.

20

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.D

elta

Elec

troni

cs(J

apan

),In

c.3

Sale

s47

3,58

0(N

ote

d)0.

29

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.D

elta

Elec

troni

csIn

tern

atio

nalL

td.

3Sa

les

3,34

7,43

1(N

ote

d)2.

06

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.Pr

eOpt

ix(J

iang

su)C

o.,L

td.

3Sa

les

202,

328

(Not

ed)

0.12

Num

ber

(Not

ea)

Nam

eof

coun

terp

arty

Nam

eof

trans

actio

npa

rties

Rel

atio

nshi

p(N

ote

b)Su

bjec

tA

mou

nt(N

ote

j)Tr

ansa

ctio

nte

rms

Perc

enta

geof

tota

lcom

bine

dre

venu

eor

tota

lass

ets(

Not

ec)

159

~149

~

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.D

elta

Net

wor

ks(D

ongg

uan)

Ltd.

3Sa

les

204,

974

$(N

ote

d)0.

13

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.D

eltro

nics

(Net

herla

nds)

B.V

.3

Sale

s14

4,51

1(N

ote

d)0.

09

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.D

elta

Gre

en(T

ianj

in)I

ndus

tries

Co.

,Ltd

.3

Sale

s23

7,46

5(N

ote

d)0.

15

2D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.D

elta

Elec

troni

cs,I

nc.

2Sa

les

15,8

35,9

39(N

ote

d)9.

75

3D

elta

Elec

troni

cs(J

apan

),In

c.D

elta

Vid

eoD

ispl

aySy

stem

(Wuj

iang

)Ltd

.3

Sale

s19

6,86

7(N

ote

d)0.

12

3D

elta

Elec

troni

cs(J

apan

),In

c.D

elta

Elec

troni

csC

ompo

nent

s(W

ujia

ng)L

td.

3Sa

les

138,

686

(Not

ed)

0.09

3D

elta

Elec

troni

cs(J

apan

),In

c.D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.3

Sale

s12

4,33

2(N

ote

d)0.

08

4D

elta

Elec

troni

csPo

wer

(Don

ggua

n)C

o.,L

td.

Del

taEl

ectro

nics

Inte

rnat

iona

lLtd

.3

Sale

s10

,212

,240

(Not

ed)

6.29

4D

elta

Elec

troni

csPo

wer

(Don

ggua

n)C

o.,L

td.

Del

taEl

ectro

nics

Int’l

(Sin

gapo

re)P

te.L

td.

3Sa

les

16,3

54,4

05(N

ote

d)10

.07

4D

elta

Elec

troni

csPo

wer

(Don

ggua

n)C

o.,L

td.

Del

taN

etw

orks

(Don

ggua

n)Lt

d.3

Sale

s45

8,94

4(N

ote

d)0.

28

5D

elta

Elec

troni

cs(D

ongg

uan)

Co.

,Ltd

.D

elta

Elec

troni

csIn

tern

atio

nalL

td.

3Sa

les

2,68

2,40

8(N

ote

d)1.

65

5D

elta

Elec

troni

cs(D

ongg

uan)

Co.

,Ltd

.D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.3

Sale

s5,

740,

303

(Not

ed)

3.53

5D

elta

Elec

troni

cs(D

ongg

uan)

Co.

,Ltd

.D

elta

Elec

troni

csPo

wer

(Don

ggua

n)C

o.,L

td.

3Sa

les

240,

324

(Not

ed)

0.00

6D

elta

Net

wor

ksIn

tern

atio

nalL

td.

Del

taN

etw

orks

(Don

ggua

n)Lt

d.3

Sale

s13

,100

,086

(Not

ed)

8.06

6D

elta

Net

wor

ksIn

tern

atio

nalL

td.

DN

ILog

istic

s(U

SA)C

orp.

3Sa

les

2,70

9,02

9(N

ote

d)1.

67

6D

elta

Net

wor

ksIn

tern

atio

nalL

td.

Aye

com

Tech

nolo

gyC

o.,L

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3Sa

les

527,

947

(Not

ed)

0.32

6D

elta

Net

wor

ksIn

tern

atio

nalL

td.

Del

taN

etw

orks

,Inc

.(Ta

iwan

)3

Sale

s44

6,76

9(N

ote

d)0.

27

Tran

sact

ion

term

s

Perc

enta

geof

tota

lcom

bine

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venu

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ec)

Num

ber

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ea)

Nam

eof

coun

terp

arty

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eof

trans

actio

npa

rties

Rel

atio

nshi

p(N

ote

b)Su

bjec

tA

mou

nt(N

ote

j)

~150

~

7D

elta

Net

wor

ks(D

ongg

uan)

Ltd.

Del

taN

etw

orks

Inte

rnat

iona

lLtd

.3

Sale

s14

,264

,698

$(N

ote

d)8.

78

8D

elta

Net

wor

ks,I

nc.(

Taiw

an)

Del

taN

etw

orks

Inte

rnat

iona

lLtd

.3

Sale

s85

1,27

3(N

ote

d)0.

44

9A

yeco

mTe

chno

logy

Co.

,Ltd

.D

elta

Net

wor

ksIn

tern

atio

nalL

td.

3Sa

les

271,

735

(Not

ed)

0.14

10D

elta

Elec

troni

cs(J

iang

su)L

td.

Del

taEl

ectro

nics

Inte

rnat

iona

lLtd

.3

Sale

s12

,978

,045

(Not

ed)

6.72

10D

elta

Elec

troni

cs(J

iang

su)L

td.

Del

taEl

ectro

nics

Int’l

(Sin

gapo

re)P

te.L

td.

3Sa

les

24,3

31,3

58(N

ote

d)12

.59

10D

elta

Elec

troni

cs(J

iang

su)L

td.

Del

taEl

ectro

nics

(Wuj

iang

)Tra

ding

Co.

,Ltd

.3

Sale

s30

6,95

4(N

ote

d)0.

16

10D

elta

Elec

troni

cs(J

iang

su)L

td.

Del

taG

reen

tech

(Chi

na)C

o.,L

td.

3Sa

les

1,10

2,70

4(N

ote

e)0.

57

11D

elta

Elec

tro-O

ptic

s(W

ujia

ng)L

td.

Del

taG

reen

tech

(Chi

na)C

o.,L

td.

3Sa

les

4,64

3,78

2(N

ote

e)2.

40

11D

elta

Elec

tro-O

ptic

s(W

ujia

ng)L

td.

Del

taEl

ectro

nics

Int’l

(Sin

gapo

re)P

te.L

td.

3Sa

les

1,83

7,42

4(N

ote

d)0.

95

11D

elta

Elec

tro-O

ptic

s(W

ujia

ng)L

td.

Del

taEl

ectro

nics

(Sha

ngha

i)C

o.,L

td.

3Sa

les

774,

832

(Not

ed)

0.40

11D

elta

Elec

tro-O

ptic

s(W

ujia

ng)L

td.

Del

taEl

ectro

nics

Inte

rnat

iona

lLtd

.3

Sale

s1,

527,

879

(Not

ed)

0.79

12D

elta

Elec

troni

csC

ompo

nent

s(W

ujia

ng)L

td.

Del

taEl

ectro

nics

Inte

rnat

iona

lLtd

.3

Sale

s1,

786,

664

(Not

ed)

0.92

12D

elta

Elec

troni

csC

ompo

nent

s(W

ujia

ng)L

td.

Del

taEl

ectro

nics

Int’l

(Sin

gapo

re)P

te.L

td.

3Sa

les

4,41

9,84

2(N

ote

d)2.

29

12D

elta

Elec

troni

csC

ompo

nent

s(W

ujia

ng)L

td.

Del

taEl

ectro

nics

(Jia

ngsu

)Ltd

.3

Sale

s10

5,27

5(N

ote

d)0.

05

13D

elta

Vid

eoD

ispl

aySy

stem

(Wuj

iang

)Ltd

.D

elta

Elec

troni

csIn

tern

atio

nalL

td.

3Sa

les

5,47

1,08

1(N

ote

d)2.

83

13D

elta

Vid

eoD

ispl

aySy

stem

(Wuj

iang

)Ltd

.D

elta

Elec

troni

cs(W

ujia

ng)T

radi

ngC

o.,L

td.

3Sa

les

614,

361

(Not

ed)

0.32

13D

elta

Vid

eoD

ispl

aySy

stem

(Wuj

iang

)Ltd

.D

elta

Gre

ente

ch(C

hina

)Co.

,Ltd

.3

Sale

s17

1,31

2(N

ote

e)0.

09

14D

elta

Elec

troni

cs(W

ujia

ng)T

radi

ngC

o.,L

td.

Del

taG

reen

tech

(Chi

na)C

o.,L

td.

3Sa

les

377,

558

(Not

ee)

0.20

Num

ber

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Nam

eof

coun

terp

arty

Nam

eof

trans

actio

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Rel

atio

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ote

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nte

rms

Perc

enta

geof

tota

lcom

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dre

venu

eor

tota

lass

ets(

Not

ec)

161

~151

~

15D

elta

Elec

troni

cs(W

uhu)

Co.

,Ltd

.D

elta

Elec

troni

csIn

tern

atio

nalL

td.

3Sa

les

3,13

6,92

7$

(Not

ed)

1.62

15D

elta

Elec

troni

cs(W

uhu)

Co.

,Ltd

.D

elta

Elec

troni

cs(J

iang

su)L

td.

3Sa

les

669,

676

(Not

ed)

0.35

15D

elta

Elec

troni

cs(W

uhu)

Co.

,Ltd

.D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.3

Sale

s4,

781,

840

(Not

ed)

2.48

16W

uhu

Del

taTe

chno

logy

Co.

,Ltd

.D

elta

Elec

troni

cs(W

uhu)

Co.

,Ltd

.3

Sale

s59

6,46

0(N

ote

d)0.

31

17D

elta

Elec

troni

cs(C

henz

hou)

Co.

,Ltd

.D

elta

Elec

troni

csIn

tern

atio

nalL

td.

3Sa

les

1,25

3,61

5(N

ote

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65

17D

elta

Elec

troni

cs(C

henz

hou)

Co.

,Ltd

.D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

.Ltd

.3

Sale

s4,

236,

474

(Not

ed)

2.19

18C

henz

hou

Del

taTe

chno

logy

Co.

,Ltd

.D

elta

Elec

troni

cs(C

henz

hou)

Co.

,Ltd

.3

Sale

s2,

904,

410

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ed)

1.50

19Pr

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ix(J

iang

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td.

Del

taEl

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td.

3Sa

les

443,

833

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ed)

0.23

20D

elta

Elec

troni

cs(S

hang

hai)

Co.

,Ltd

.D

elta

Gre

ente

ch(C

hina

)Co.

,Ltd

.3

Sale

s92

4,10

1(N

ote

e)0.

48

21D

elSo

lar(

Wuj

iang

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.D

elSo

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o.,L

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3Sa

les

5,75

2,00

0(N

ote

f)2.

98

22C

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tern

atio

nalL

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Cyn

tec

Co.

,Ltd

.3

Sale

s40

2,55

3(N

ote

g)0.

21

23C

ynte

cC

o.,L

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Cyn

tec

Inte

rnat

iona

lLtd

.3

Sale

s1,

650,

108

(Not

eh)

0.85

24C

ynte

c(S

uzho

u)C

o.,L

td.

Cyn

tec

Inte

rnat

iona

lLtd

.3

Sale

s2,

019,

775

(Not

eh)

1.05

25C

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cEl

ectro

nics

(Suz

hou)

Co.

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atio

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3Sa

les

2,56

1,07

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ote

h)1.

33

26D

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Gre

en(T

ianj

in)I

ndus

tries

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,Ltd

.D

elta

Elec

troni

csIn

t’l(S

inga

pore

)Pte

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Sale

s46

6,06

5(N

ote

d)0.

24

26D

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Gre

en(T

ianj

in)I

ndus

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,Ltd

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elta

Elec

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csIn

tern

atio

nalL

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3Sa

les

289,

723

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ed)

0.15

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Elec

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cs,I

nc.

Del

taEl

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Inte

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s30

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16

Tran

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term

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Perc

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geof

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0D

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taEl

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1A

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3,85

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ed)

0.39

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elta

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Del

taEl

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nics

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Acc

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ble

179,

608

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ed)

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tern

atio

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3A

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3,44

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78

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3A

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15

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inga

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Elec

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ongg

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Co.

,Ltd

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ount

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1,37

4,10

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71

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955

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2.09

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703,

737

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0.88

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Acc

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547,

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ed)

0.28

2D

elta

Elec

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.D

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Elec

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Acc

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559,

237

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~156~

11.12. OPERATING SEGMENT INFORMATION

(1) General informationThe Group considers the business from a product perspective. The Group’s business is segregatedinto power electronics business, energy management business and smart green life business.Breakdown of the revenue from all sources is as follows:A. Power electronics business:

Design, manufacture, and sales of power supplies applied to computers, office automationequipment, consumer electronic products and auto electronic products and design, manufacture,and sales of electronic components applied to computers, information, communication,household electric appliances, consumer electronic products and automobiles. The mainproducts are Server power supply, Workstation power supply, Desktop power supply,Notebook power supply, High Efficiency Electronic Lighting Ballast, LED Power, DisplayPower Supply, Gaming Power supply, Industrial power, Medical power supplies, Magneticcomponent, EMI filters, Precision Motors, Fans and Fans Module, Cooling Module, Blower,Mini Wind Energy Shell Parts, Heat Exchanger, RF/wireless component, Bluetooth Module,Optical Transceiver Module, Networking Component, etc.

B. Energy management business:Design, manufacture, and sales of power supplies/converters and electromechanical productsapplied to communication, information, network and renewable energy. The main products areTelecom and Industrial Power System, Uninterruptible Power Supplies (UPS), precisioncooling, Photovoltaic Inverter (PIV), converter for wind energy, Medium Voltage Drive,electric vehicle charging station, Programmable Logic Controllers, AC Motor Drives, ACServo Motors and Drives, Brushless DC Motors and Drives, Human Machine Interfaces,Temperature Controllers, Encoders, machine vision system, computed numerically controllers,etc.

C. Smart green life business:Design, manufacture, and sales of projectors, LED lighting products, Integrated solutions andServices, interactive speech recognition system. The main products are professional high enddigital projectors, digital electronic cinema, home cinema projectors, video conferenceprojection systems, digital signage display, educational use and portable digital projectors,game use projectors, digital display wall, video system integrated solution, rent service forhigh projection, professional LED lamps, LED indoor light, LED component and module,New light engine, LED driver module and optical component, LED control system, Designand construction of lighting application, green energy integration design and architecture,development automatic speech outbound, Interactive voice response, voice keyword spottingsolution, Speech Analysis Automation, voice biometrics with language technology, etc.The Group changed the classification of certain product categories during this year, which

167 ~157~

resulted to the change in the reportable operation segments compared to the prior year.The segment-related information in prior year has been restated to conform with theinformation presented for this year.

(2) Measurement of segment informationThe Group’s segment profit (loss) is measured with the operating profit (loss) before tax, which isused as a basis for the Group assessing the performance of the operating segments. The accountingpolicies of the operating segments are in agreement with the significant accounting policiessummarized in Note 2.

~158

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169 ~159~

(4) Reconciliation information for segment profit (loss)A. The revenue from external parties reported to the chief operating decision-maker is measured

in a manner consistent with that in the income statement.B. A reconciliation of reportable segments profit (loss) to profit (loss) before tax and discontinued

operations is provided as follows:

C. The amount of assets was not provided to the chief operating decision-maker in accordancewith EITF 99-151, “Explanation for Segment Reporing”, of the R.O.C. Accounting Researchand Development Foundation dated June 28, 2010. The measurement amount of assets thatshould be disclosed is $0 and the reconciliation is provided as follows:

(5) Information about products and servicesAs the Group considered the business from a product perspective, the reportable segments werebased on different products and services. Revenues from external customers are the same as inNote 12(3).

2012 2011(As restated)

Reportable segments' profit 20,196,508$ 16,017,082$Other segments’ loss 2,844,519)( 2,855,421)(Non-operating income 6,057,920 4,932,337Non-operating expenses 903,572)( 672,666)(Profit before tax and discontinued operations 22,506,337$ 17,421,332$


2012 2011Reportable segments' assets -$ -$Unallocated items:Current assets 121,889,748 130,007,582Funds and investments 10,765,590 12,129,644Property, plant and equipment 34,908,430 36,917,785Intangible assets 11,733,212 12,096,932Other assets 2,591,617 2,042,036

Total assets 181,888,597$ 193,193,979$

December 31,

~160~

(6) Information about geographic areasInformation about geographic areas for the years ended December 31, 2012 and 2011 were asfollows:

(7) Information about major customersThere are no customers accounting for more than 10% of the Group’s operating revenues for theyears ended December 31, 2012 and 2011.

13. DISCLOSURES RELATING TO THE ADOPTION OF IFRSsPursuant to the regulations of the former Financial Supervisory Commission, Executive Yuan, R.O.C.(FSC) effective January 1, 2013, a public company whose stock is listed on the Taiwan StockExchange Corporation or traded in the GreTai Securities Market should prepare financial statementsin accordance with the International Financial Reporting Standards, International AccountingStandards, and relevant interpretations and interpretative bulletins that are ratified by FSC (togetherreferred to as IFRSs).The Company discloses the following information in advance prior to the adoption of IFRSs under therequirements of Jin-Guan-Zheng-Shen-Zi Order No. 0990004943 of FSC, dated February 2, 2010:(1) Major contents and status of execution of the Company’s plan for IFRSs adoption:

The Company has established the IFRSs taskforce headed by the Company’s chief financial officer,which is responsible for setting up a plan relative to the Company’s transition to IFRSs. Themajor contents and status of execution of this plan are outlined below:

Non-current Non-currentRevenue assets Revenue assets

Taiwan 1,683,574$ 20,455,758$ 2,563,292$ 21,217,061$USA 24,033,673 - 21,946,836 185,569Mainland China 99,426,994 27,831,876 95,566,385 28,701,888Others 46,615,683 945,625 42,397,826 952,235Total 171,759,924$ 49,233,259$ 162,474,339$ 51,056,753$

20112012

171~161~

(2) Material differences that may arise between current accounting policies used in the preparation offinancial statements and IFRSs and “Rules Governing the Preparation of Financial Statements bySecurities Issuers” that will be used in the preparation of financial statements in the future:The Company uses the IFRSs already ratified currently by FSC and the “Rules Governing thePreparation of Financial Statements by Securities Issuers” that will be applied in 2013 as the basisfor evaluation of material differences in accounting policies as mentioned above. However, theCompany’s current evaluation results may be different from the actual differences that may arisewhen new issuances of or amendments to IFRSs are subsequently ratified by FSC or relevantinterpretations or amendments to the “Rules Governing the Preparation of Financial Statements bySecurities Issuers” come in the future.

Working Items for IFRSs Adoption Status of Execution

1. Formation of an IFRSs group Completed

2. Setting up a plan relative to the Group's transition to IFRSs Completed

3. Identification of the differences between current accountingpolicies and IFRSs Completed

4. Identification of consolidated entities under IFRSs framework Completed

5. Evaluation of the impact of each exemption and option on theCompany under IFRS 1 - First-time Adoption of InternationalFinancial Reporting Standards

Completed

6. Evaluation of needed information system adjustments Completed

7. Evaluation of needed internal controls adjustments Completed

8. Establish IFRSs accounting policies Completed

9. Selection of exemptions and options available under IFRS 1 -First-time Adoption of International Financial ReportingStandards

Completed

10. Preparation of statement of financial position on the date oftransition to IFRSs

Completed

11.1. Preparation of comparative financial information underIFRSs for the first quarter of 2012

Completed

11.2. Preparation of comparative financial information underIFRSs for the first half year of 2012

Completed

11.3. Preparation of comparative financial information underIFRSs for the nine-month period ended September 30, 2012

Completed

11.4. Preparation of comparative financial information underIFRSs for the year ended December 31, 2012

Completed

l2. Completion of relevant internal control (including financialreporting process and relevant information system) adjustments

Completed

~162~

Material differences identified by the Company that may arise between current accountingpolicies used in the preparation of financial statements and IFRSs and “Rules Governing thePreparation of Financial Statements by Securities Issuers” that will be used in the preparation offinancial statements in the future, and the effects of exemptions selected by the Company underIFRS 1 – First-time Adoption of International Financial Reporting Standards (refer to Note 13(3))are set forth below:A. Reconciliation of significant differences as of January 1, 2012

R.O.C. GAAP Adjustment IFRSs DescriptionFinancial assets at fair value throughprofit or loss

1,822,867$ 983,142$ 2,806,009$ a.

Available-for-sale financial assets 649,872 3,813,667 4,463,539 b.Financial assets carried at cost 4,243,408 3,840,505)( 402,903 b.

Deferred income tax assets - current 597,914 597,914)( - c.Land 1,779,860 620,497 2,400,357 d.Revaluation increments 620,497 620,497)( - d.

Construction in progress andprepayments for equipment

6,599,291 3,120,148)( 3,479,143 e.

Deferred pension costs 9,299 9,299)( - f.

Other intangible assets 4,560,628 1,228,031)( 3,332,597 g.Long-term prepaid rent - 1,228,031 1,228,031 g.

Deferred income tax assets -non-current

- 2,507,096 2,507,096 c.

Other assets - other 888,026 3,116,266 4,004,292 e.f.Others 171,422,317 1,740 171,424,057

Total assets 193,193,979$ 2,854,045$ 196,048,024$Accrued expenses 11,268,694 338,541 11,607,235 h.

Land value incremental reserve 119,864 119,864)( - d.Accrued pension liabilities 2,617,949 324,877 2,942,826 f.i.

Deferred income tax liabilities -non-current

3,867,305 1,412,872 5,280,177 d.j.

Provision for employee benefits - 367,105 367,105 i.Others 82,834,498 81,645)( 82,752,853

Total liabilities 100,708,310$ 2,241,886$ 102,950,196$Paid-in capital in excess of par value

of common stock26,509,455 2,684,671)( 23,824,784 k.

Special reserve 4,796,006 527,556 5,323,562 d.

Undistributed earnings 13,045,300 2,782,430 15,827,730 a.c.d.f.h.i.j.k.

Unrecognized pension cost 263,401)( 263,401 - f.

Asset revaluations 527,556 527,556)( - d.Others 47,870,753 250,999 48,121,752

Total stockholders' equity 92,485,669$ 612,159$ 93,097,828$

173 ~163~

Explanations for the significant differences are as follows:a. The private placement of convertible bonds held by the Company were invested before the

adoption of EITF 99-256 of the Accounting Research and Development Foundation, R.O.C.,dated October 8, 2010, “Accounting for private placement of convertible bonds”, and aredesignated as financial assets at fair value through profit or loss and are subsequentlyremeasured and stated at cost. Since these are hybrid instruments, the fair value ofderivatives embedded in the bonds cannot be measured reliably. If there is any objectiveevidence that the bonds are impaired, the impairment loss is recognized. However, inaccordance with IAS 39, “Financial Instruments: Recognition and Measurement”,investments in financial instruments without an active market but with reliable fair valuemeasurement should be measured at fair value using a valuation technique. The fair valueof private placement of convertible bonds is measured based on Binomial Stock OptionsPricing Model. Therefore, an increase in financial assets at fair value through profit or lossof $983,142 and undistributed earnings of $983,142 is recognized at the date of transition toIFRSs.

b. Before the amendment of “Rules Governing the Preparation of Financial Statements bySecurities Issuers”, dated July 7, 2011, unlisted stocks and emerging stocks held by theGroup should be measured at cost and recognized in “Financial assets carried at cost”.However, in accordance with IAS 39, “Financial Instruments: Recognition andMeasurement”, investments in equity instruments without an active market but with reliablefair value measurement (i.e. the variability of the estimation interval of reasonable fairvalues of such equity instruments is insignificant, or the probability for these estimates canbe made reliably) should be measured at fair value. Therefore, the Group reclassified“Financial assets carried at cost” of $3,840,505 to “Available-for-sale financial assets” anddecreased other reserves income by $26,838 for the difference between fair value and bookvalue at the date of transition to IFRSs.

c. The Group recognized a decrease in deferred income tax assets - current of $597,914 andincrease in deferred income tax assets - non-current of $2,507,096 at the date of transitionto IFRSs. The reasons are as follows:a) In accordance with current accounting standards in R.O.C., a deferred tax asset or

liability should, according to the classification of its related asset or liability, beclassified as current or noncurrent. However, a deferred tax asset or liability that isnot related to an asset or liability for financial reporting, should be classified as currentor noncurrent according to the expected period to realize or settle a deferred tax asset orliability. However, under IAS 1, “Presentation of Financial Statements”, an entityshould not classify a deferred tax asset or liability as current. Therefore, the Groupreclassified deferred income tax assets - current of $597,914 to deferred income taxassets - non-current at the date of transition to IFRSs.

~164~

b) The Group increased deferred income tax assets of $197,092, and increasedundistributed earnings of $197,092 when computing the tax effects of differencesbetween IFRSs and the current accounting standards in R.O.C.

c) Deferred income tax assets and deferred income tax liabilities do not meet the criteriafor offset under IAS 12, “Income Taxes”. Therefore, the Group reclassified deferredincome tax assets and deferred income tax liabilities of $1,712,090 at the date oftransition to IFRSs.

d. In accordance with current accounting standards in R.O.C., property, plant and equipmentare stated at cost except for land which is carried at appraised value. However, when costmodel is adopted, revaluation is not applied under IAS 16, “Property, Plant and Equipment”.The Company reclassified land revaluation increments of $620,497 to cost of landaccording to IFRS 1, “First-time Adoption of International Financial Reporting Standards”and reclassified asset revaluations of $527,556, and revaluation increments of $119,864 toundistributed earnings and deferred income tax liabilities; and subsequently appropriatedunder the requirements of Jin-Guan-Zheng-Fa Order No. 1010012865 of FSC, the assetrevaluation of $527,556 recognized as undistributed earnings in accordance with theexemption applied under IFRS 1 to special reserve.

e. The Group’s prepayments for the acquisition of property, plant and equipment are classifiedas “property, plant and equipment” in accordance with the “Rules Governing thePreparation of Financial Statements by Securities Issuers”. However, under IFRSs, it shouldbe classified as other assets-other - non-current. Therefore, the Group reclassified property,plant and equipment, net of $3,120,148 to other assets-other - non-current of $3,120,148.

f. The Group increased accrued pension liabilities of $1,315,320, decreased prepaid pensioncost of $3,882, decreased deferred pension costs of $9,299, decreased undistributedearnings of $1,352,241 and decreased unrecognized pension cost of $263,401. The reasonsare as follows:a) The discount rate used to calculate pensions shall be determined with reference to the

factors specified in R.O.C. SFAS 18, paragraph 23. However, IAS 19, “EmployeeBenefits”, requires an entity to determine the rate used to discount employee benefitswith reference to market yields on high quality corporate bonds that match the currencyat the end day of the reporting period and duration of its pension plan; when there is nodeep market in corporate bonds, an entity is required to use market yields ongovernment bonds (at the end day of the reporting period) instead.

b) In accordance with current accounting standards in R.O.C., the unrecognizedtransitional net benefit obligation should be amortized on a straight-line basis over theaverage remaining service period of employees still in service and expected to receivebenefits. However, in accordance with IAS 19, “Employee Benefits”, the unrecognizedtransitional net benefit obligation should not be recognized because it is the Group’s

175 ~165~

first-time adoption of IFRSs.c) In accordance with current accounting standards in R.O.C., the excess of the

accumulated benefit obligation over the fair value of the pension plan (fund) assets atthe balance sheet date is the minimum amount of pension liability that is required to berecognized on the balance sheet (“minimum pension liability”). However, IAS 19,“Employee Benefits”, has no regulation regarding the minimum pension liability.

g. In accordance with current accounting standards in R.O.C., the subsidiaries’ payments forthe acquisition of land use rights are classified as “Other intangible assets”. However,transactions meet the criteria of long-term operating leases shall be classified as“Long-term prepaid rent” under IAS 17, “Leases”. Therefore, the Group reclassified otherintangible assets of $1,228,031 to long-term prepaid rent at the date of transition to IFRSs.

h. The current accounting standards in R.O.C. do not specify the rules on the cost recognitionfor accumulated unused compensated absences. The Group recognizes such costs asexpenses upon actual payment. However, IAS 19, “Employee Benefits”, requires that thecosts of accumulated unused compensated absences should be accrued as expenses at theend of the reporting period. Therefore, the Group recognized accrued expenses of $338,541and reduced undistributed earnings of $338,541 at the date of transition to IFRSs.

i. The current accounting standards in R.O.C. do not specify the rules on the recognition ofother long-term employee benefits other than pensions. However, IAS 19, “EmployeeBenefits”, requires that the costs of other long-term employee benefits other than pensionsshould be recognized as expenses as the employees render service. Certain subsidiarieslocated in Mainland China maintain a separate fund that meet the above criteria, and haverecorded accrued pension liabilities of $990,443. The Company decreased accrued pensionliabilities by $623,338, increased undistributed earnings by $623,338, and the remainingbalance of $367,105 was recognized as provisions for employee benefits based on theresults of the actuarial valuation at the date of transition to IFRSs.

j. At the date of transition to IFRSs, the Group reclassified land value incremental reserve of$119,864 to deferred income tax liabilities as described in Note 13(2)A.d. Explanation forreclassification of deferred income tax assets and deferred income tax liabilities of$1,712,090 is the same as in Note 13(2)A.c.c). The Group decreased deferred income taxliabilities by $419,082, and increased undistributed earnings by $419,082 when computingtax effects of difference between IFRSs and the current accounting standards in R.O.C.

k. At the date of transition to IFRSs, the Group decreased additional paid-in capital by$2,684,671, and increased undistributed earnings by $2,684,671 as follows:a) In accordance with current accounting standards in R.O.C., if an investee company

issues new shares and original shareholders do not purchase or acquire new sharesproportionately, but the investor company does not lose its significant influence overthe investee company, the investment percentage, and therefore the equity in net assets

~166~

for the investment that an investor company has invested, will be changed. Suchdifference shall be used to adjust the ‘Additional paid-in capital’ and the ‘Long-termequity investments’ accounts. However, in accordance with IFRS 1, “First-timeAdoption of International Financial Reporting Standards”, accounting treatment forchanges in the parent's ownership interest in a subsidiary that do not result in a loss ofcontrol shall apply prospectively from the date of transition to IFRSs.

b) Compensation cost of employee stock options, whose grant date was after (on) January1, 2008 and before January 1, 2010, is recognized as an expense using the intrinsicvalue method according to the Jin-Guan-six-Zi Order No. 0960065898 of the formerFinancial Supervisory Commission, dated December 12, 2007. However, according toIFRS 2, “Share-based Payment”, the cost of the share-based payment arrangementsstated above should be expensed at the fair value of the equity instruments over thevesting period. Therefore, the Group increased capital reserve by $47,934, anddecreased undistributed earnings by $47,934 at the date of transition to IFRSs.

177

~167~

B. Reconciliation of significant differences as of and for the year ended December 31, 2012

R.O.C. GAAP Adjustment IFRSs DescriptionAvailable-for-sale financial assets 2,953,289$ 1,194,002$ 4,147,291$ a.m.Financial assets carried at cost 1,665,433 1,267,144)( 398,289 a.Non-current assets classified as

held for sale12,075,952 809,984)( 11,265,968 f.p.

Deferred income tax assets - current 589,592 589,592)( - b.n.Land 3,959,555 620,497 4,580,052 c.Revaluation increments 620,497 620,497)( - c.Construction in progress and

prepayments for equipment3,329,580 606,293)( 2,723,287 d.

Investment property - 1,235,053 1,235,053 e.Deferred pension costs 5,094 5,094)( - f.Other intangible assets 4,114,239 1,155,604)( 2,958,635 g.Long-term prepaid rent - 1,155,604 1,155,604 g.Deferred income tax assets -

non-current- 2,276,662 2,276,662 b.

Asset leased to others 1,278,851 1,235,053)( 43,798 e.Other assets - other 59,406 606,293 665,699 d.Others 151,237,109 5,270)( 151,231,839

Total assets 181,888,597$ 793,580$ 182,682,177$Accrued expenses 11,389,826 389,743 11,779,569 h.Liabilities directly associated with

non-current assets classified asheld for sale

6,837,219 12,277 6,849,496 h.

Land value incremental reserve 119,864 119,864)( - j.Accrued pension liabilities 2,746,430 320,417 3,066,847 f.i.Deferred income tax liabilities -

non-current4,148,016 1,013,912 5,161,928 b.j.

Provision for employee benefits - 393,366 393,366 i.Others 57,243,416 140,423)( 57,102,993

Total liabilities 82,484,771$ 1,869,428$ 84,354,199$Paid-in capital in excess of par value

of common stock26,403,107 1,628,556)( 24,774,551 k.

Special reserve 1,628,536 527,556 2,156,092 c.Undistributed earnings 22,805,885 1,002,810 23,808,695 b.c.f.h.i.j.

k.l.m.n.o.pUnrecognized pension cost 284,342)( 284,342 - f.Asset revaluations 527,556 527,556)( - c.Amounts recognised directly in

equity relating to non-current assetsheld for sale

778,508 805,483)( 26,975)( k.o.

Others 47,544,576 71,039 47,615,615Total stockholders' equity 99,403,826$ 1,075,848)($ 98,327,978$

~168~

Explanations for the significant differences are as follows:a. Please refer to Note 13(2)A.b. for the explanation of the adjustment. The Group reclassified

“Financial assets carried at cost” of $1,267,144 to “Available-for-sale financial assets” anddecreased other reserves by $73,142 for the difference between fair value and book value.

b. Explanation for the decrease in deferred income tax assets - current of $589,592 andincrease in deferred income tax assets - non-current of $2,276,662 is the same as in Note13(2)A.c. This includes reclassification of deferred income tax assets - current of $589,592to deferred income tax assets - non-current, the difference of $243,998 for deferred incometax when computing the tax effects of differences between IFRSs and the current accountingstandards in R.O.C., and the reclassification of deferred income tax assets and deferredincome tax liabilities of $1,443,072.

c. Please refer to Note 13(2)A.d. for the explanation for the adjustment.d. Please refer to Note 13(2)A.e. for the explanation for the adjustment. Therefore, the Group

reclassified property, plant and equipment, net of $606,293 to other assets-other -non-current of $606,293.

e. In accordance with current accounting standards in R.O.C., the subsidiaries’ property that isleased to others is presented in the “Assets leased to others”. However, property that meetsthe definition of investment property is classified and accounted for as “Investment property”under IAS 40, “Investment Property”. Therefore, the Group reclassified assets leased toothers of $1,235,053 to investment property.

f. The Group increased accrued pension liabilities by $1,207,766, decreased prepaid pensioncost (shown as non-current classified as held for sale) by $3,882, decreased deferred pensioncosts by $5,094, decreased undistributed earnings at beginning of year by $1,352,241,decreased unrecognized pension cost by $284,342, decreased operating costs by $11,847 and

R.O.C. GAAP Adjustment IFRSs DescriptionOperating revenues 171,759,924$ -$ 171,759,924$Operating costs 129,599,771)( 61,917)( 129,661,688)( f.h.i.Operating expenses 24,808,164)( 13,880 24,794,284)( f.h.i.Operating income 17,351,989 48,037)( 17,303,952Non-operating income and expenses 5,154,348 670,682)( 4,483,666 l.m.o.Income before income tax 22,506,337 718,719)( 21,787,618Income tax expense 3,349,038)( 190,639 3,158,399)( b.j.n.Income from continuing operations 19,157,299 528,080)( 18,629,219Loss from discontinued operations 1,939,811)( 804,522)( 2,744,333)( h.p.Consolidated net income 17,217,488$ 1,332,602)($ 15,884,886$Attributable to:Equity holders of the Company /

Owners of the parent16,109,542$ 1,326,158)($ 14,783,384$

Minority interest / Non-controllinginterests

1,107,946 6,444)( 1,101,502

17,217,488$ 1,332,602)($ 15,884,886$

179 ~169~

decreased operating expenses by $64,172. Please refer to Note 13(2)A.f. for the explanationfor the adjustment.

g. Please refer to Note 13(2)A.g. for the explanation for the adjustment. Therefore, the Groupreclassified other intangible assets of $1,155,604 to long-term prepaid rent.

h. The Group increased accrued expenses and liabilities directly associated with non-currentassets classified as held for sale by $401,347, decreased undistributed earnings at beginningof period by $338,541, increased operating costs by $7,045, increased operating expenses by$56,760 and decreased loss from discontinued operations by $999. Please refer to Note13(2)A.h. for the explanation for the adjustment.

i. Certain subsidiaries located in Mainland China maintain a separate fund which was recordedas accrued pension liabilities of $955,660. The Group decreased accrued pension liabilitiesby $562,294, increased undistributed earnings at beginning of year by $623,338, increasedoperating costs by $67,511 and decreased operating expenses by $6,467 according to theexplanation stated in Note 13(2)A.i. The remaining balance of $393,366 was recognized asprovision for employee benefits.

j. Explanation for the reclassification of land value incremental reserve of $119,864 todeferred income tax liabilities is the same as in Note 13(2)A.d. The Group computeddeferred income tax effects for the difference of ($549,024) between IFRSs and the currentaccounting standards in R.O.C. and reclassified deferred income tax assets and deferredincome tax liabilities by $1,443,072.

k. The Company decreased capital reserve-long-term investments and amounts recogniseddirectly in equity relating to non-current assets held for sale by $2,732,605 and increasedundistributed earnings at beginning of year by $2,732,605. Please refer to Note 13(2) A.k.a).for the explanation for the adjustment. The balance of “capital reserve - differencebetween the proceeds from disposal of subsidiary and the book value” is $0 because theCompany reclassified all capital reserve - long-term investments to undistributed earnings atthe date of transition to IFRSs. When subsequent adjustment generated the debit balance inaccordance with paragraph 30, IAS 27, “Consolidated and Separate Financial Statements”,the Company decreased undistributed earnings by $131,933 and increased capital reserve -long-term investments by $131,933.

l. As mentioned in Note 13(2)A.a., due to the different methods of valuation on the privateplacement of convertible bonds, the Company increased financial assets at fair value throughprofit or loss by $983,142 and increased undistributed earnings at beginning of year by$983,142 at the date of transition to IFRSs. But as mentioned in Note 4(2)C., the privateplacement convertible bonds of Dynapack were converted into private placement commonstocks in the first quarter of 2012 and gain on disposal of investments was recognized.Therefore, the Company decreased gain on disposal of investments (shown as non-operatingincome and expenses) and financial assets at fair value through profit or loss with the same

~170~

amount by $988,751 for the year ended December 31, 2012.m. In accordance with current accounting standards in R.O.C., for equity investment except for

those measured at fair value through profit and loss, the cash dividends received during theyear of investment or conversion should be treated as the recovery of the investment cost.IFRSs do not specify the rules for this issue. Therefore, the Group increased dividendincome (shown as non-operating income and expenses) by $117,872 and increasedavailable-for-sale financial assets acquisition costs by $117,872 for the year endedDecember 31, 2012.

n. Regarding tax rates that shall apply to the deferred tax assets or liabilities associated withunrealized gains or losses arising from transactions between parent company andsubsidiaries by buyer tax rate or seller tax rate, the current accounting standards in R.O.C.do not specify the rules for this issue; while, the Company adopts seller tax rate forcomputation. However, under IAS 12, “Income Taxes”, temporary differences in theconsolidated financial statements are determined by comparing the carrying amounts ofassets and liabilities in those statements and applicable taxation basis. The Company’staxation basis is determined by reference to the Group entities’ income tax returns.Accordingly, buyer tax rate shall apply to the deferred tax assets or liabilities in theconsolidated financial statements. Therefore, the Company increased deferred tax assets by$58,940 and decreased income tax expense by $58,940 for the year ended December 31,2012.

o. In accordance with current accounting standards in R.O.C., in case the parent companychanges its share ownership of the subsidiary but does not lose control over the subsidiaryafter control was obtained, the purchase method of accounting is used to account for theincrease in ownership interest, while the decrease in ownership interest is regarded asdisposal of shares and the related disposal gain or loss is recognized in profit or loss. Inaccordance with IAS 27, “Consolidated and Separate Financial Statements”, changes in aparent company’s ownership interest that do not result in the parent company losing controlof the subsidiary are equity transactions, which would not affect profit or loss and goodwillwould not be remeasured. In addition, the balance of “capital reserve - difference betweenthe proceeds from disposal of subsidiary and the book value” is $0 because the Companyreclassified all capital reserve - long-term investments to undistributed earnings at the dateof transition to IFRSs. Therefore, the Company decreased undistributed earnings by$318,343, decreased loss on disposal of investments (shown as non-operating income andexpenses) by $88,323 and increased amounts recognised directly in equity relating tonon-current assets held for sale by $230,020.

p. As mentioned in Note 4(13), DelSolar meets the criteria of the subsidiary classified as heldfor sale due to the merger through share exchange by DelSolar and NSP. The subsidiariesclassified as held for sale shall be measured at the lower of carrying amount and fair value

181~171~

less costs to sell on the date which the subsidiaries meet the criteria to be classified as heldfor sale. The balance of “capital reserve - difference between the proceeds from disposal ofsubsidiary and the book value” is $0 because the Company reclassified all capital reserve -long-term investments to undistributed earnings at the date of transition to IFRSs. It causesthe difference of carrying amount and the fair value less costs to sell is lower the carryingamount under IFRS. Therefore, the Company increased impairment loss (shown as loss fromdiscontinued operations) by $809,194 and decreased non-current assets classified as held forsale by $809,194, respectively.

(3) The Company selected the following exemptions in accordance with IFRS 1, “First-time Adoptionof International Financial Reporting Standards” and “Rules Governing the Preparation of FinancialStatements by Securities Issuers” that are expected to be applied in 2013:A. Business combinations

The Group selected not to apply the requirements in IFRS 3, “Business Combinations”,retrospectively to business combinations that occur before the date of transition to IFRSs.

B. Share-based payment transactionsThe Group selected not to apply the requirements in IFRS 2, “Share-based Payment”,retrospectively to the equity instruments that are vested and liabilities that are settled beforethe date of transition to IFRSs, arising from share-based payment transactions.

C. Cost recognizedThe Group selected the values of property, plant and equipment that are revaluated inaccordance with the accounting standards in R.O.C. before the date of transition to IFRSs asthe cost recognized at the revaluation date.

D. Employee benefitsThe Group selected to recognize all accumulated actuarial gain or loss associated withemployee benefit plans in retained earnings at the date of transition to IFRSs, and disclose theinformation of present value of defined benefit obligation, fair value of plan assets, gain orloss on plan assets and experience adjustments in accordance with paragraph 120A (P), IAS 19,“Employee Benefits”, based on their prospective amounts for each accounting period from thedate of transition to IFRSs.

E. Compound financial instrumentsFor the liability portion of compound financial instruments which is not outstanding at the dateof transition to IFRSs, the Company elected not to separate the liability component from theequity component.

F. Designation for financial instruments recognized previouslyThe Group selected to designate certain “financial assets carried at cost” as “available-for-salefinancial assets” at the date of transition to IFRSs.

The selection of exemptions above may be different from the actual selection at the date oftransition to IFRSs due to the issuance of related regulations by competent authorities, changes in

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economic environment, or changes in the evaluation of effect of the Company’s selection ofexemptions.

delta electronics, inc. 2012 annual report · delta electronics, inc. 2012 annual report...

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